Standard & Poor's maintained a negative outlook on the nonprofit higher education sector in 2015, citing competition and tuition pressures.
In a report released Thursday, S&P credit analyst Jessica Matsumori said the sector will "likely see more negative rating actions than positive in 2015 as institutions attempt to keep tuition affordable while adding or improving amenities to draw and retain students."
Nonprofit colleges are in an increasingly competitive environment for students, Matsumori said in her report "Upping the Ante." Students considering nonprofit private colleges may also consider public universities, trade schools, community colleges, for-profit colleges, or simply entering the workforce as options.
Schools are having a hard time increasing tuition significantly to keep up with expenses and they face growing financial aid demands.
S&P expects federal government spending to decrease across the board by 0.7% in 2015. This decrease may affect Pell Grant financial aid awards, research grants, and contract awards to colleges and universities.
The ratio of downgrades to upgrades in the sector has grown for four years in a row, with 30 downgrades and seven upgrades in 2014.
Thomas Jefferson School of Law defaulted on its debt in fall 2014. The San Diego school was the first S&P-rated nonprofit private university to default in 12 years, Matsumori said.
The analyst noted that 19 of the 49 ratings with a negative outlook are private universities in the BBB category.
Of the 15 private schools with speculative grades, six have negative outlooks. None of the 15 have positive outlooks.
Franklin Pierce University in New Hampshire is S&P's lowest-rated nonprofit higher education institution at CCC with a negative outlook.
