Standard & Poor’s Issues Negative Outlook for Nonprofit Higher Education

Standard & Poor’s Rating Services has issued a negative outlook for nonprofit higher education for 2015, citing, among other things, tension between rising costs to colleges and a focus on student affordability. In a report released on Thursday, the agency says the ensuing competition among colleges to attract top students will weigh heaviest on “those whose credit characteristics are already on the cusp of a lower rating.”

The report, “Upping The Ante: Costs of Luring Top Students Keeps the Outlook Negative on U.S. Not-for-Profit Higher Education Sector,” cites compliance—with organizations like the NCAA and the federal government—and risk management as two factors contributing to the mounting costs to attend college.

“It is our belief that colleges or universities that are unable to distinguish themselves in the market through their reputation or offerings will have to compete for students purely on price, which will weaken demand and possibly cut into their enrollment over time,” the report states.