As Fiscal Year Ends, Big Questions Loom for Colleges’ Financial Futures

More than 40 states made mid-year cuts totaling nearly $60 billion according to the Center on Budget and Policy. July 1st begins a new fiscal year and, while fiscal year-end numbers are only one measure of overall stability, it is one people scrutinize and often value the most. If the value dips too low relative to debt load, bondholders could declare the institution in default and demand payment. The high unemployment rate and low personal revenues from income taxes make this situation even worse. All but two states increased their unemployment rates in May. State personal income tax in May was 20% lower than the same period last year.

This may mean that incoming freshmen this year might face a reduction in many services they need to succeed. If these patterns continue, it will be even more important for high schools to prepare students well for college and the world of work. Students themselves will need to have a lot more initiative and personal responsibility to find the help they need at college or within the community. They need to realize that the current economic climate makes getting a college degree more important than ever and that the costs of dropping out may be higher than ever. High schools can start early to communicate that message in ways that are positive, proactive and empowering.

Chronicle of Higher Education

Will the stock market close on a high note tomorrow, the last day of the fiscal year for most colleges? Will that last big gift come in before the books close?

As always, the answers could help determine whether some colleges will face demands to pay off their debt faster than planned or be subjected to extra monitoring by the U.S. Department of Education. Others might encounter more scrutiny from their accreditors, or pay higher rates of interest when they borrow cash to cover day-to-day expenses.

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