Weekly Market Update

AVERAGE COLLEGE DISCOUNT RATE INCREASES

Thursday, May 18, 2017

The NACUBO surveyed 411 private, non-profit institutions for its 2016 Tuition Discounting Study. According to the report, private colleges are discounting their tuition at historically high rates by offering grants, scholarships and fellowships. Collectively, these schools offered an estimated 49.1% discount rate for first-time, full-time students in 2016-17 and 44.2% for all undergraduate students. This means that for every dollar a student pays in gross tuition revenue, the colleges and universities will use nearly half for financial aid. Underlying these private colleges' bargain prices is today's stagnant economy and its effects on families' ability to send their children to college, according to Ken Redd, NACUBO's director of research and policy analysis. The discounts are also driven by competition for high school graduates, especially those who are very qualified or relatively wealthy, as Stephen Burd, a senior policy analyst with the Education Policy Program, told MarketWatch. While this could be viewed as recruiting of favored students, Redd points to evidence that private, nonprofit institutions are working to meet their students' changing financial needs.

In Other News

  • According to Bloomberg, next week's negotiated municipal supply is expected to be approximately $6.2 billion, of which, approximately $313.2 million is attributable to higher education borrowers.
  • House Democrats on Monday said they plan to seek an increase in the Pell Grant program to make college more affordable. The plan is part of a new "Aim Higher" legislative campaign that touches on broad issues of access, affordability and completion. The Democrats' campaign comes as Congress plans to pursue reauthorization of the Higher Education Act.
  • Lawmakers in the state of Tennessee voted to approve a new free tuition program, which will allow adults to receive free college tuition at community and technical colleges in the state. The initiative is part of Governor Bill Haslam's goal to increase the number of Tennessee residents with a postsecondary degree or certificate to 55% by 2025.
  • Nonprofit Quarterly explored the differences between nonprofit and for-profit nursing homes and hospices and found that even though nonprofits cost less, they provide better services to their residents. Studies show that this is largely due to nonprofit nursing homes having a higher staff-to-resident ratio and innovative improvements to their programs.
  • Consumer prices rebounded moderately in April as energy prices rose, increasing by 0.2% after a 0.3% drop in March. Over the past 12 months, inflation is up 2.2%, a sign inflationary pressures are stabilizing this spring.

Rating Agency Update

  • Moody's lowered its rating for Valparaiso University from A2 to A3 and assigned A3 to the university's Series 2017 Educational Facilities Revenue Bonds. The outlook is stable.
  • Moody's assigned Aa1 to Brown University's Series 2017 Higher Education Facilities Revenue Bonds. The outlook is stable.
  • Moody's assigned Aa3 to Lafayette College's Series 2017 College Refunding and Revenue Bonds. The outlook is stable.
  • Moody's assigned Aa2 to Duke University Health System's Series 2017 Bonds. The outlook is stable.
  • Moody's lowered its rating for Northern Illinois University from Baa3 to Baa1.
  • Moody's lowered its rating for Elizabeth City State University from Baa1 to Baa2. The outlook remains negative.
  • Moody's assigned Aa2 to Del Mar College District's Series 2017 Limited Tax Bonds. The outlook is stable.
  • Moody's assigned Aa1 to University of Colorado's Series 2017A-1 Enterprise Refunding Revenue Bonds. Moody's also upgraded University of Colorado's outstanding parity debt to Aa1. The outlook is stable.
  • S&P affirmed its BBB rating on Barry University's revenue bonds. The outlook was changed to negative from stable.
  • S&P assigned AA to Trinity University's Series 2017 Higher Education Revenue Improvement Bonds. The outlook is stable.
  • S&P assigned BBB+ to Cabrini University's Series 2017 Revenue Bonds. The outlook is stable.
  • S&P assigned AA+ to Brown University's Series 2017 Facilities Revenue Bonds. The outlook is stable.
  • S&P affirmed its A rating on Evergreen State College. The outlook was changed to negative from stable.
  • S&P assigned AA+ to Williams College's Series S Revenue Bonds and Series N Remarketed Bonds. The outlook is stable.
  • S&P assigned A- to Goucher College's Series 2017A Revenue Bonds. The outlook is stable.