The financial conditions of many U.S. colleges and universities will likely not improve much this year, as states continue cutting funding for public schools, students become more price sensitive, and areas for other revenue remain stretched, a lead rating agency said on Monday, Reuters reports.

“During the past year, public and political scrutiny of colleges and universities, both not-for-profit and for-profit, has escalated and we expect that the sector will remain under the microscope in 2012 and beyond,” said Moody’s Investors Services in a report outlining why it is maintaining a “mixed outlook for U.S. not-for-profit private and public colleges and universities, mirroring our 2011 outlook.”

While undergraduates continue to enroll, “demand for some graduate programs and professional schools … is softening,” Moody’s said, noting that “evolving demand trends for undergraduate and graduate programs highlight flight to quality and affordability.”

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