For-profit colleges feeling the strain of dwindling revenues

Once-quiet college towns started buzzing again this week as students returned for their latest classes. What they might be less prepared for is trimmed services at their for-profit colleges, which are looking to offset the growing issue of dwindling revenue streams.A recent Standard & Poor’s Rating Services study found growing stress on operating services at for-profit universities as the result of dwindling revenue streams.

“Like past years, we expect universities to offset declining revenue through viable expense controls and modifications to tuition and financial aid strategies,” the study said.

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Through strong returns on investments in fiscal 2013, controlling expenses and modifying tuition and financial aid options, colleges have been able to largely offset the declining revenues. Still, the S&P study cautions that these are not permanent solutions.

“At some point, inability to grow revenue could overwhelm management’s ability to cut administrative expenses or trim the margins, and rectifying the imbalance will require deeper expense cuts,” the study said.

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