TEXT-S&P report on cost issues on U.S. higher education

Tue Aug 21, 2012 12:50am IST

Aug 20 - Standard & Poor's Ratings Services said in a report today that U.S. colleges and universities are approaching a point where many of their customers can't afford the tuition without significant financial aid. And, typically, tuition is a university's largest revenue source.

The report, "Higher Education Affordability Squeezes Students And Institutions Alike," published today on RatingsDirect, notes that the challenge of affordability affects enrollment trends and pressures colleges to offer more financial aid to attract students. Increasing financial aid, in turn, diminishes a college's balance sheet and operating performance.

Standard & Poor's Rating Services believes that rising college costs, along with a decrease in state support at public institutions and volatile revenue levels at private institutions, could begin to significantly pressure ratings at some schools and universities. Along with the decline in net tuition revenue at some schools -- the first time we've seen that in several years -- public sector schools are generally seeing state appropriations fall in the wake of the recession.

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