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Higher Education Debt Volume Expected to Remain High in 2006

February 16, 2006

Despite overall increases in both endowment dollars and state appropriations for higher education, the credit outlook for public and independent not-for-profit institutions in 2006 is mixed, according to Standard & Poor’s Ratings Services.  Although debt volume is lower than last year, it still remains relatively high. Favorable endowment returns, increased state spending, and record level private giving in the aftermath of Hurricane Katrina helped combat increased levels of debt, but institutions continue to take advantage of an extended period of low interest rates, resulting in more debt over the long term. 

The report, "U.S. Higher Education 2006 Outlook: Credit Quality Generally Stable, But Challenges Remain," outlines the increasingly competitive environment in which colleges and universities are operating, including: 

• Increasingly demanding students, creating pressure to expand facilities (both academic facilities and those for student life)
  
  
• Rapidly changing technology
  
  
• Competition for federal research dollars