Fitch: Financial Performance Weakens at U.S. Private Colleges and Universities

NEW YORK--()--Link to Fitch Ratings' Report: 2013 Median Ratios for U.S. Private Colleges and Universities http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751667

Despite most Fitch rated private colleges and universities seeing higher net tuition income and slower growth in scholarship discount rates, operating margins were weaker across the board, according to a Fitch Ratings report.

'Weakened operating margins indicate expense pressures including net student revenue and increased general operating expenses,' said Joanne Ferrigan, Senior Director.

'Net tuition revenue is pressured by tuition discounting, competition, and in some regions fewer high school graduates.'

While net tuition revenue increased between fiscal 2009 through 2013 according to the medians for all rating categories, expense pressures constrained operating margins in fiscal 2013.

Fitch considers an institution with declining net student revenue as challenged and likely to be operating in a competitive market requiring high institutional aid, which could trigger rating actions.

Fiscal 2013 financial medians for private colleges and universities maintain a strong relationship between revenue diversity and rating quality. Institutions rated in the 'AAA' and 'AA' categories typically have more diverse revenue streams and less reliance on net student fee revenue. Private colleges and universities in the 'A' and lower rating categories typically have higher net student fee dependence.

The enrollment growth rate slowed between fiscal 2012 and 2013 for all private university rating categories, and was slightly negative for 'A' and lower rated institutions. Fitch attributes this fluctuation in part to competition for students, affordability concerns from families, and in some regions fewer high school graduates.

For more information, a special report titled 'Fiscal 2013 Median Ratios for US Private Colleges and Universities' is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Joanne Ferrigan, +1-212-908-0723
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Susan Carlson, +1-1-312-368-2092
Director
or
Alexander Vaisman, 1-212-908-9721
Associate Director
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Joanne Ferrigan, +1-212-908-0723
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Susan Carlson, +1-1-312-368-2092
Director
or
Alexander Vaisman, 1-212-908-9721
Associate Director
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com