Promoting financial literacy serves two important purposes. First, it makes everyone aware of the institution’s current financial health. Second, it makes everyone aware of what will be required to ensure the institution’s financial health over the long term.
Financial literacy is the ability to understand where an institution stands at any given time with respect to key elements of its balance sheet and income statement. It is a skill that every institution should foster across its faculty and staff.
Given the uncertainties facing higher education today, it is critical to understand what is driving an institution’s financial success, and what is holding it back.
The higher education sector leaders from the three rating agencies share their insights on 2024 outlooks, growth strategies, consolidation within higher education, and current rating committee concerns.
Watch higher education sector leaders from Fitch Ratings, Moody’s Investors Service, and S&P Global Ratings for an in-depth conversation on trends affecting rating actions in higher education today.
Some colleges are pursuing athletic program expansion to boost enrollment and tuition revenue. The key question is whether this strategy will boost the institution’s financial performance as well.
Some institutions have addressed the tuition pricing problem by instituting across-the-board tuition resets. A better approach is one that combines evaluation of the competitive landscape with a careful analysis of the institution’s current academic product mix.
Higher education is facing a crisis of confidence in the value of a college degree, with risk implications for enrollments, tuition pricing, and capital spending. Avoiding these risks begins with finding and quantifying the appropriate “corridor of control” for your institution.
Financial reserves are essential to the sustainability of any college or university. Integrating reserve goals to strategic planning through development of a strategic financial plan helps ensure that sufficient reserves will be available to meet the institution’s needs.
Issuance of tax-exempt debt is one of the most affordable ways for institutions to finance large capital projects. The affordability of debt is partly contingent on an institution’s credit rating, and unrestricted financial reserves are a significant component of that rating.
Anyone unfamiliar with the financial structure of not-for-profit colleges and universities may question why these organizations often carry significant financial reserves on their...