Higher education is education, but it's also an industry in this country. As evidence of that I would point to the fact that Moody's Investor's Service issues market outlooks for higher education. (Perhaps you remember Moody's from the run-up to the financial crisis, when it and other investment ratings agencies gave high seals of approval to the toxic mortgage-backed securities that blew up the economy.)
And Moody's view on the higher education industry the last couple years has been "mostly bleak," writes Scott Carlson from the Chronicle of Higher Education.
The service's most recent outlook for higher ed., issued this week, was negative once again. Moody's cited a weak economy, which hurts families' ability to pay for college, and political fights over the federal budget, which could decrease the student aid available.
The sluggish economy led to rising loan default rates, high unemployment and stagnant family income — all of which can hurt the revenues of schools. More expenses are coming up as well, after years of colleges and universities having avoided investments in human capital (i.e., raises and new hires) and infrastructure.
At Kansas University, total student enrollment is down for the fifth straight year, though the school had a 6.1 percent larger freshman class compared with last year. Along with federal battles over revenue, the university has also faced sharp cuts from the Kansas state government. With a $34.3 million decrease of funding for state schools over two years, Kansas is one of the few states in the U.S. to make outright cuts to higher education funding.
All these factors would seem to suggest that KU could keep struggling for a couple of years yet to regain previous enrollment levels, especially if tuition rates rise in response to state cuts. Lower levels will make it all the more difficult for the university to make capital investments.
See how easy that was? Maybe I should start my own investor outlook service. To subscribe to my outlooks, for a Moody's-esque price, or to send KU news tips, email me at email@example.com
Greetings Heard on the Hill Readers,
Last week I joined the Lawrence Journal-World’s staff and will soon take over the Kansas University beat and Heard on the Hill blog from Matt Erickson as he moves on to other things and other places.
Since I came aboard, Matt has been taking me around campus to introduce me to as many deans and administrators and faculty as he can wrangle up in mid-summer. He’s been a phenomenal help in getting me up to speed. His efforts hopefully will make the transition as smooth as possible for me, for the folks who regularly have to field my questions, and for Journal-World readers.
The university is a huge and fascinating institution. Big research universities like KU generate vast amounts of knowledge and, like all universities, they enjoy a rich intellectual life. For someone who loved learning new things in college and preferred studying to going out to the bars, it's amazing and a little ridiculous that I get to write about research and university events for a living.
I've also walked into the job during a dramatic transition for KU and colleges across the country. Federal and state cuts have strained university budgets, forcing higher ed institutions to find new sources of revenue and to scale back their basic research and services. The country collectively holds about $1 trillion in student debt, a statistic that worries many and puts pressure on colleges to prove their value. Online education and other technologies have opened new models of curriculum and degree-getting that some think could disrupt higher education the same way that the Internet has disrupted media companies, along with just about every other kind of organization.
A big part of my job will be monitoring these trends as they play out on the hill. Of course, KU is also unique in many ways, and I'm excited about giving readers a window into the personalities and daily goings on at campus.
A little bit about me, if you're curious: I have lived in Lawrence on and off for about 7 years, all told. I did my undergraduate work in economics and creative writing at KU, a double major that confused and distressed my peers in both schools. More recently I reported for the Kansas City Star's business desk and for a digital news startup called the Missouri Business Alert. I did my master's work in journalism at (please no judgment) the University of Missouri.
I began my own higher education kind of late. Before attending KU, I worked as a waiter, bus boy, fry cook, janitor, video store clerk, warehouse drone and fast food worker. I got a lot of experience from those jobs and worked with great people, but I must say newspaper work is quite a bit more exciting.
So that's all by way of introduction. All of you out there in Journal-World-land, please don't hesitate to reach out if you have questions, comments or pertinent information. Matt will surely be missed, but I will do everything I can to keep you all informed and engaged. Let me know if there's anything I can do to better accomplish that.
And if you really want to get things off to a rollicking start, you can send your KU news tips to firstname.lastname@example.org.
Sincerely, Ben Unglesbee, The New Guy