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Moody’s Reports Highlight ‘Divergent Trends’ Between Stronger and Weaker Colleges

Moody’s Investors Service released two reports today that predict a widening gap between have and have-not colleges. One report cites “highly divergent credit trends” among colleges and universities: Colleges that were highly dependent on tuition and had weaker market positions saw declines in aspects that Moody’s measures; for example, the lower the Moody’s rating, the more tuition discounting increased. Meanwhile, Moody’s analysts said that highly rated universities saw growth in tuition and fees and better operating performance. Moody’s expected those divergent trends to widen in 2011 and 2012, echoing findings in a January report. Another Moody’s report released today, a brief examination of trends in gifts, says that colleges will see even more activity from donors in 2011, following a rebound in gift revenues in 2010. The report says that the trend will mainly benefit “highly rated, market-leading universities that tend to attract the bulk of private philanthropy flowing to the higher-education sector.”  Aaa-rated private institutions took in 32 percent of the nearly $10-billion raised by the sector in 2010. Both new reports are available only to Moody’s subscribers.

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