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One of the big three rating agencies sees college enrollment down as much as 20% for colleges this fall

Juliana Kaplan Jun 9, 2020, 4:26 PM

Harvard is facing a $415 million revenue drop this year. Ruobing Su/Business Insider

  • A new report from Fitch Ratings anticipates fall college enrollment declining anywhere between 5% to 20%.
  • Private colleges, which rely on tuition and student fees for a greater amount of their revenue, may be particularly impacted.
  • Colleges have already experienced a revenue drop, and may offer extra discounts to try and enroll or retain students.

In fall 2020, college enrollment is expected to be down between 5% to 20%, according to a new report from the Fitch Ratings Group.

And private colleges could be hit harder by an enrollment decline. According to Fitch, which is one of the big three credit rating agencies along with S&P and Moody’s, tuition and student fees make up around 82% of private colleges’ revenue. For public universities, those costs only make up around 38% of revenue.

Some universities have already felt the pandemic revenue effect; Harvard is facing a $415 million revenue drop for this year, and anticipates an additional $715 million for the year starting July 1, reports Janet Lorin at Bloomberg.

Fitch anticipates that private colleges in “competitive regions” like the Northeast — and those with an “already vulnerable demand profile” — will be the most impacted by this enrollment decline. Schools that have a wider geographic pool, a higher matriculation rate, and diversity in revenue streams will not be as affected.

The pandemic economy will also likely intensify the financial impact on schools. As Fitch notes, expected family contributions could drop, and the need for financial need will likely increase. In order to attract students — or to retain current ones — schools will likely offer a higher discount rate.

According to a April survey of 1,100 current high school seniors and college students by higher-ed research and marketing firm SimpsonScarborough, 10% of high school seniors will no longer attend a four-year institution.

Ths survey also found that 41% of minority high school students said they likely won’t attend college in the fall or it’s “too soon to tell” — 24% of white high school seniors said the same.

And finances are just one piece of the likely college enrollment decline. Students don’t know what campus life will look like come fall — and colleges are still figuring that out themselves.

“Almost all of my students who have been admitted to top-tier colleges are reconsidering their plans for this upcoming academic year, with some submitting gap year request forms to delay the start of their freshman year so that they can have the full college experience,” college admissions consultant Christopher Rim, the CEO of Command Education, previously told Business Insider.

This article appeared in Business Insider on Jun 10, 2020