A new Massachusetts law requires increased financial disclosures for the state’s colleges. It also boosts state regulators’ authority to monitor colleges’ financial strength and requires those that are deemed at risk to file contingency plans for their students.
The law will be credit positive, said Moody’s, the ratings firm, if it leads to more orderly and fewer abrupt college closures while improving public confidence about the oversight of small private colleges’ financial risks. However, it adds a new layer of government complexity for colleges in a state and sector that “already has multiple layers of oversight and sometimes competing interests.”
Moody’s praised a provision in the law that calls for additional training on financial standards for college trustees.
Small private colleges increasingly are at risk of closure, said Moody’s, which projects this trend to continue, particularly in the Northeast, due in part to that region’s demographics.