Fitch: Reducing Student Debt Load Won't Help Higher Ed Finances

Efforts to reduce the amount of debt college students accumulate may help the students, but aren’t likely to help colleges’ near-term finances, according to Fitch Ratings.

“Current attempts to reduce tuition increases and use online courses to decrease the time required to earn degrees may help reduce the debt load,” analysts wrote in a report Friday. “Over the longer term, the impact associated with massive open online courses and other strategies still in development is uncertain.”

Many higher education issuers have already taken take steps to slow the rate of tuition increase. They have kept increases in the 3% to 4% range as affordability has become a priority, Fitch said.

Other colleges and universities are pursuing online classes that allow students to complete their degrees in fewer semesters, given the potentially greater availability of core courses.

“In our view, neither of these strategies financially affect institutions and may help reduce the debt load for students,” analysts said.

All of these initiatives, including plans to recognize work or life experiences degree credit, are in their infancy and face significant hurdles to implementation, they added.

Antioch University students recently became eligible to receive credit for certain online courses taught at the University of Pennsylvania. San Jose State University is also designing a phase of the online course implementation process.

Fitch said it believes that if massive open online courses do become adopted, they may contribute to the evolution of the higher education landscape in the long term.

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