‘Ivy gap’ grows – Competing with online courses

In the face of competition from online-degree programs, the credit-rating gap is expanding among private colleges and universities, The Wall Street Journal reported August 17.

Moody’s Investors Service in New York said schools with very high ratings should hold steady because of big endowments and fundraising efforts and strong demand for higher education, the Journal said.

Those factors all help to offset limited increases in tuition, higher faculty salaries and investment in technology, Moody’s said.

While online-degree programs pose a challenge to all colleges, the Journal said, schools with lower credit ratings may be at greatest risk.

To generate much-needed revenue, many schools have added adult education, a market that the is most at risk from online classes, Susan Fitzgerald, a senior credit officer at Moody’s, told the Journal.

But even top-drawer schools face challenges. Moody’s last year downgraded debt of three major colleges with costly medical centers.

Moody’s also says that lower-rated private schools typically lack large research programs that attract more government funding.

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