The New "New Normal": Trends In U.S. Higher Education Post-Pandemic Versus Post-Recession

Ten years after the Great Recession, U.S. colleges and universities found themselves in a "new normal" environment characterized by greater competition and constrained operations, with the value of a college degree in question and all institutions forced to reevaluate their attractiveness relative to that of peers. S&P Global Ratings' sector outlook turned negative by the start of 2018, as additional pressures at the state and federal level combined with fewer opportunities in the capital markets, and remained negative leading into the COVID-19 pandemic. While we could not then anticipate the uniquely acute stresses the pandemic imposed on higher education, it accelerated challenges that had been building over time. Demographic pressures loomed on the horizon, long-term increases in institutional financial aid

...- The U.S. higher education sector is struggling with student demographic pressures and affordability considerations on one hand and rising expenses on the other, though ample financial resources and brand recognition buoy the top institutions. - In a trend reversal, inflation outpaced tuition increases in the past five years, while instruction expenses lagged even further behind as universities cut costs. - Although interest rate trends inform debt issuance across the sector, we see the greatest correlation at the lowest-rated private schools....

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