Category Archives: Debt

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Moody’s Issues Negative Outlook for Higher Education

On the heels of a similarly downcast assessment by Standard & Poor’s, Moody’s Investors Service has issued a negative outlook for the higher-education sector in the United States. The credit-rating agency also issued individual reports on median benchmarks for the finances of public and nonprofit private colleges, noting significant tuition-revenue declines at both types of institutions.

While American higher education faces limited growth prospects over the next 12 to 18 months, Moody’s says, p…

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Laureate’s Credit Rating Drops Because of Growing Debt

Moody’s Investors Service announced on Friday that it had downgraded the ratings outlook of Laureate Education Inc., to negative from stable. The credit-rating agency affirmed the for-profit education company’s B2 Corporate Family Rating but lowered its senior secured bank-credit facilities to B2 from B1.

Laureate has become increasingly leveraged because of debt-financed acquisitions, and Moody’s said it was concerned that returns on those investments would be insufficient to support a B2 ratin…

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When Laying Blame for Rising College Costs, Don’t Forget About Enrollment

In recent months, higher-education news coverage across the country has focused on the increased share of public-college costs being shifted from state governments to students.

The prevailing story line goes like this: States have “disinvested” in higher education during the past quarter-century, “cutting” money for public colleges and forcing institutions to raise tuition to cover the loss of tax dollars. As a result, many of the stories proclaim, students are neck-deep, or worse, in student-lo…

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Another Report Describes Shrinking Amount of State Money for Higher Ed

While increased federal spending for higher education faces an uphill battle in Congress, pressure is mounting from Democrats in Washington, D.C., to raise state appropriations for higher education.

A report released on Thursday by the liberal-leaning group Demos is just the latest to detail the growing cost of tuition at public colleges, along with the shrinking amount of money that state governments provide to those institutions.

Per-student state spending on public higher education shrank nea…

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Is College Worth It? 2 New Reports Say Yes (Mostly)

In recent years, folks as different as Mitt Romney, Peter Thiel, William J. Bennett, and the disaffected people of the Occupy movement started turning their attention to the cost of college—and the underlying question always seemed to be whether college was still worth its cost.

There has been a lot of evidence to suggest that college is indeed worth it, and plenty of studies and pundits lining up to tout the evidence.

One of the latest comes from College Summit, a nonprofit group that promotes …

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Rising Debt Engulfs Colleges as Well as Students

President Obama took aim last week at rising levels of student borrowing, but two graduate students in sociology say the real culprit for growing college debt is Wall Street.

In a report posted last week on the Web site of the Scholars Strategy Network, Charlie Eaton and Jacob Habinek, doctoral candidates at the University of California at Berkeley, assert that the expanding burden of tuition debt is “partly driven by the indebtedness universities have taken on.” Public research universities hav…

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Student-Loan Watchdog Digs Beneath the $1-Trillion Debt Tally

The Consumer Financial Protection Bureau has taken a microscope to the $1-trillion in federal student-loan debt and found that more than 9 percent of that amount is in default.

Over all, about seven million borrowers have defaulted on federal or private student loans, while about a third of federal direct-loan borrowers have sought to delay or lower their repayments, the bureau’s ombudsman, Rohit Chopra, wrote in a blog post on Monday.

The bureau’s analysis of data collected by the U.S. Departme…

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New Gauge of Colleges’ Financial Health Comes Up Short

Forbes magazine is the latest to weigh in on the financial health of colleges, with its new “Forbes College Financial Grades” joining the ranks of the credit-rating agencies, the U.S. Department of Education, and consultants like Bain & Company.

In its August 13 issue, the magazine offers financial grades running from A-plus to D for 925 private, nonprofit colleges based on a nine-part formula it created. The formula takes into account factors like the level of a college’s dependence on tuitio…

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Refinancing Hurdles Still Beset Borrowers of Private Student Loans

Borrowers who took out private student loans continue to face tough obstacles in trying to change repayment terms if they run into financial troubles or want to improve their credit profiles, according to a report released on Thursday by the Consumer Financial Protection Bureau.

Rohit Chopra, the watchdog agency’s student-loan ombudsman, wrote in the report that 62 percent of complaints about private student loans focused on repayments and typically were concentrated on just eight companies, led…

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What It Means to Fail the Education Dept.’s Financial-Health Test

How many nonprofit colleges failed the U.S. Department of Education’s financial-responsibility test for the 2011 fiscal year? That depends on what it means to “pass.”

According to the department, colleges with scores of 1.5 to 3.0 all pass and never hear from the department. (The scores, derived from financial information the colleges provide, run from positive 3.0 to negative 1.0.) Those that score 1.0 to 1.5 do not pass. The department considers them “financially responsible” but subjects them…