Moody Investor’s Services, a bond credit rating business, issued a negative ranking of higher education on Jan. 16, bringing attention to the challenges facing the system.
“The best colleges and universities faced diminished prospects for revenue growth,” said the Moody report. It adds that the sector will need to adjust to the prospect of muted revenue growth.
Moody advises that “strong governance and management leadership will be needed by most universities as they navigate through this period of intensified change and challenge.”
Revenue growth will likely remain sluggish until the economy strengthens, higher-paying jobs become more plentiful, and growth in both household income and wealth accelerate, said Steven R. Malin, a Queens College economics professor.
“This is a cyclical challenge, not a permanent crimp in revenue streams to colleges and universities,” Malin said.
Moody’s report advocated for “bolder actions by university leaders to reduce costs and increase operational efficiency.”
Like any corporation, universities need to find ways to boost efficiency and productivity,
Malin said.
One of the ways to boost both would be the use of modern technologies by employed
experienced, skilled staff, according to the professor. Any institution that does not use the best
available management and operational techniques that employ the most modern technologies will
struggle to be efficient and productive, he added.
Moody’s report also discussed the ongoing popularity of online education as both an opportunity and challenge for higher education.
“While online classes could threaten to undermine the residential college model, they could also provide new ways to make money and provide schools with broader audiences,” the report said.
Malin believes online education will continue to grow, not just in market share, but also in its sophistication and diversity.
“History has not recorded many instances when advancing technologies eventually became less prevalent,” Malin said.
