CHICAGO--(BUSINESS WIRE)--U.S. private colleges and universities largely fall into two categories: those with diverse revenue streams supplemented by robust research, healthcare and fundraising, and those highly dependent on student-generated revenues, according to a new Fitch Ratings report.
'Fitch continues to view the presence of a materially diverse revenue base as a key indicator of credit quality among private colleges and universities,' said Joanne Ferrigan, Director in Fitch's Public Finance group. 'This revenue concentration requires close management of student enrollment, as well as tuition discounting.' Affordability remains a sector concern.
Tuition discounting increased across all rating categories over the last five years in response to concerns regarding the growing cost of higher education and competition. In fiscal 2012, the highest levels of discounting occurred within the lower rated private university categories.
Median operating margins were positive across all rating categories in fiscal 2012, including the speculative grade category that has historically suffered from systemic deficits.
The stability is likely due to continued expense containment and efforts to moderate tuition discounting.
For more information, the special report titled '2013 Median Ratios for U.S. Private Colleges and Universities' is available on the Fitch Ratings web site at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2012 Median Ratios for US
Private Colleges and Universities