While applications to graduate schools are up, enrollment is down and, according to a new report from Moody’s Investor Services, that could hurt the credit ratings of colleges. The report, released Oct. 5, said that declines will likely “depress net tuition revenue growth.”
The Moody’s report builds on a Sept. 28 report from the Council of Graduate Schools which found that first time enrollment in master’s and certificate level programs declined by 2.1% between fall 2010 and fall 2011, but applications for admission to graduate programs rose 4.3%.
In addition to decreased enrollment in Master of Arts and Master of Science programs, enrollment has also declined for MBA and law degrees as well. Historically, business and law programs have been profit centers for universities.
Graduate school enrollment usually runs countercyclical to the economy, so that as unemployment goes up so does graduate school enrollment. However, as Moody’s reports, increasing skepticism of the value of advanced degrees and concerns about escalating student debt burdens has “broken down” the traditional relationship between graduate enrollment and the economy.
Because “various pressures” are hampering undergraduate tuition growth, public and private universities have been relying on graduate program enrollment to increase their net tuition revenue, said Moody’s. Currently market leading schools are outperforming smaller schools, with some large, brand-name colleges experiencing increased enrollment, but for small schools with little price flexibility even small declines in graduate enrollment can prevent growth in tuition revenue.
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