Fitch: Small US Colleges Facing Demographic Risk

NEW YORK--(BUSINESS WIRE)-- Small, tuition-dependent private institutions that serve local or regional markets and public, non-flagship institutions will face the greatest risk from the decline in students that is forecast over the coming decade, Fitch Ratings says.

High school graduates in the coming years are forecast to grow modestly nationwide and decline in some states and regions. The US Department of Education's National Center for Education Statistics forecasts that the number of high school graduates nationwide will grow by just 1% from 2011 to 2022. Ten states are forecast to see the number of graduates grow by less than 5% over that time frame. The report predicts that Northeast and Midwest high school graduate numbers will shrink by approximately 10% over the same period.

Many colleges will be able to mitigate some of this risk by growing their student bodies beyond their traditional geographic draws. We expect some to attempt to recruit more international students. Public institutions may also attempt to grow their out-of-state populations.

Online learning platforms may also help mitigate some demographic change risk. However, these platforms' long-term growth rates are uncertain. The 2014 Survey of Online Learning conducted by the Babson Survey Research Group showed that the number of higher education students that took more than one online course rose by 3.7% in 2014 - the slowest growth in the previous ten years. The survey data also showed that public and private non-profit institutions online course usage grew while for-profit institutions shrank.

The potential long-term growth of online learning received some good news last week when the US Dept. of Education announced experimental federal aid for partnerships between colleges and non-traditional providers, including unaccredited online courses.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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