How will colleges fare financially in 2025? It depends.

Higher Ed Dive

Ben Unglesbee

December 9, 2024

Dive Brief:

• S&P Global Ratings and Moody’s Ratings last week issued their respective forecasts for higher education in 2025, both pointing to financial opportunities for some and continued challenges for others.

• S&P for the third year issued a split outlook for the nonprofit higher ed sector. The 2025 outlook is negative for what analysts called “highly regional, less-selective institutions that lack financial flexibility” but positive for larger colleges with broad reach, steady demand and ample resources.

• Meanwhile, Moody’s again gave the higher education sector a stable outlook as “revenue and expense paths converge.”

Dive Insight:

Analysts for both agencies presented a mixed bag of challenges and opportunities for higher ed writ large. Whether an institution faces more of one or the other depends largely on its profile.

S&P analysts called that state of affairs the “bifurcation” of the financial world of nonprofit colleges.

As they put it, “Strong institutions hold their market position, excel at fundraising, and have healthy balance sheets while working to improve operating margins; struggling schools face enrollment declines, leading to strained operations and, often, liquidity issues.”

Moody’s analysts said colleges generally stand to benefit in 2025 from increases in state funding, as well as other revenue sources, such as tuition, donations and income from university healthcare systems.

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