Moody’s Down on Higher Ed; Illinois Schools Already on Notice

Moody’s Investors Service is taking a pessimistic view of American colleges and universities Wednesday. The agency says repeated increases in tuition are partly to blame. Brian Mackey reports.

The outlook for higher education is negative, says Moody’s. This year, that also includes top-tier, research-driven schools, which had been viewed more favorbly.

The credit rating agency points to factors like a decline in federal and state funding. And Moody’s analyst Karen Kedem says as universities raise tuition to try to make up the difference, families are less able to pay.

KEDEM: “[Combining] that with concerns over the value of a higher education in an economy with limited job prospects contributes to this issue of: Have we reached a tipping point?”

University of Illinois spokesman Tom Hardy says the state’s flagship school is aware of concerns about cost. He says while demand for a U. of I. education remains high, the decline in state funding has been a problem.

HARDY: “We’re no longer really a state-supported university — we’re really a state-assisted university.”

The negative outlook comes as the debt of Illinois’ public universities are already getting extra scrutiny. State government has the lowest credit rating in the country, and last month Moody’s said state schools could soon be following Illinois downward.

— Brian Mackey

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