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Fitch Predicts Challenges for Small Colleges in 2024

December 6, 2023

In its latest report, Fitch Ratings outlines a challenging landscape ahead for U.S. colleges and universities in 2024. This analysis highlights a convergence of factors that will contribute to a poor outlook, including escalating labor and wage costs, heightened interest rates, and uneven enrollment gains. This blog will delve into the crucial findings and implications presented in Fitch’s assessment. Read more about the report in this Higher Ed Dive article.


1. Financial Flexibility Under Pressure

Fitch foresees a constrained financial landscape for higher education institutions in the upcoming year. With soaring labor and wage costs and increased interest rates, colleges may find it challenging to counterbalance rising operational expenses with tuition increases, ultimately limiting their financial maneuverability.


2. Widening Disparities Among Institutions

The report underscores a deepening schism between larger, more selective colleges and their smaller, less selective counterparts. While flagship institutions and selective private colleges are expected to maintain or even improve enrollment figures, regional public institutions and less-selective private schools may encounter setbacks, emphasizing a growing divide in the sector.


3. Adaptation Challenges and FAFSA Rollout Delays

Beyond financial constraints, Fitch’s analysis sheds light on the broader challenges facing higher education. The report points to ongoing consolidation trends as more colleges merge or outright close due to prolonged financial stress. Meanwhile, the delayed release of the Free Application for Federal Student Aid (FAFSA) introduces a unique stress point, potentially influencing both financial aid processes and overall enrollment figures for the 2024-25 academic year.


In summary, the Fitch Ratings’ 2024 outlook for U.S. higher education paints a nuanced and intricate picture. As colleges and universities grapple with financial pressures, enrollment uncertainties, and market demands, the imperative to innovate and adapt becomes apparent. Navigating these stormy seas requires proactive measures to address the evolving needs of students and the dynamic educational landscape.

Check out how this small college in Arkansas increased overall enrollment by 19% in Fall 2023.