Decline in Graduate Student Numbers Could Mean Credit Problems

Universities sustained a 2-percent drop in first-time enrollments in master’s and certificate-level programs from 2010 to 2011. If this continues it could become a huge problem for institutions of higher learning, according to piece in the Chronicle of Higher Education, because fewer graduate student could lead to a lower credit rating for the colleges, making it harder for them to borrow money.

As the Chronicle’s Nick DeSantis explains:

Falling enrollment among graduate-school programs in the United States could hurt colleges’ credit because those declines are likely to stifle tuition-revenue growth, Moody’s Investors Service said on Friday.

“Many public and private universities with both undergraduate and graduate programs have been relying on graduate-student enrollment to help build net tuition revenue as various pressures encumber undergraduate net tuition-revenue growth,” Moody’s added. “For weaker institutions with low price flexibility, even small declines in graduate enrollment can impede growth in net tuition per student.”

The declines are particularly a problem for M.B.A. and law school programs. Because students in those programs typically finance their entire educations with loans, enrollment declines mean universities can’t count on these programs to bring in steady cash infusions every year.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer