Moody’s Predicts a Difficult Year Ahead for Higher Education
“fierce competition for students will increase as the market for students begins to shrink”
Naturally, this is all being presented as the fault of the Trump administration, not our bloated system of higher education.
Inside Higher Ed reports:
Moody’s Projects a Negative Outlook for Higher Education
Federal policy challenges and a dwindling population of traditional-age students will make for a difficult year ahead for higher education, Moody’s Ratings predicted in a report issued last week.
The credit ratings agency predicted that revenue growth will trail behind previous years while expense growth will put a squeeze on operating margins, though strong investment returns should help buoy institutions’ financial position. Moody’s noted that federal policy challenges are also expected to “cause operational and governance stress” as the Trump administration continues to cut federal research funding and seeks to limit the number of international students attending U.S. colleges.
In March, just a few months after President Trump took office, the agency downgraded its outlook for the sector from stable to negative.
The report noted that the fall 2026 enrollment outlook is uncertain and that “fierce competition for students will increase as the market for students begins to shrink” due to the demographic cliff.
Overall revenue growth is projected to be 3.5 percent, down slightly from 3.8 percent in 2025. But anticipated growth will vary by institution type. Large, comprehensive, private universities are expected to see 4 percent revenue growth while their public peers will see 3.4 percent. Mid-sized private universities are expected to see the lowest revenue growth in the sector, at 2.3 percent.
Moody’s offered a bleak outlook for federal research funding.
“Federal funding for research grants and contracts will be stagnant, as a long period of continuous growth in federal research and development funding has leveled off and universities grapple with potential caps to indirect costs and ongoing grant cancellations,” Moody’s officials wrote. “While deep cuts to research are unlikely, we forecast modest declines in fiscals 2026 and 2027 to overall funding. These reductions will be concentrated in funding from the National Institutes of Health (NIH).”
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