Nearly 70 percent of the class of 2018 took out student loans, graduating with an average debt of $29,800. Americans collectively owe nearly $1.57 trillion in student debt, according to the Federal Reserve, which is a 27 percent jump since 2014. Among the many reasons: more than two-thirds believe that their tuition discount rate is unsustainable.Īt the same time, many students feel burdened by their educational debt, which suggests that schools can’t continue to rely so heavily on conventional tuition as a sustainable revenue source. Just 44 percent of chief financial officers of higher education institutions say they are confident their college will be financially stable over the next 10 years, down from 54 percent in 2016, according to a survey last year by Inside Higher Ed. To be financially stable, most colleges need revenue growth of at least 3 percent, Moody’s advised. Moody’s recently predicted that growth in operating expenses will outpace revenues at most institutions of higher education. This snapshot may even understate the problem. There will likely be more: our review of public data suggests that at least 90 medium-size not-for-profit institutions across the country show some signs of financial pressure. In the worst cases, some schools have lost accreditation or have shut down. These pressures have forced many schools to make painful choices, including cutting programs, laying off faculty, merging with other schools, and reducing student admissions. Others, including many small liberal arts colleges, are facing declining enrollment, nervously watching expenses outpace revenue, and tapping their endowments to cover shortfalls. Top-ranked schools turn away throngs of top applicants, while cushioned by staggering endowments. Higher education institutions in the United States face starkly different prospects.
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