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Moody's: University Downgrades Continue

October 30, 2013

Negative ratings pressures have intensified on higher education, according to a Moody’s Investors Service report for subscribers that reviewed the ratings agency's work through the end of the third quarter.

There have been 21 downgrades of public colleges and universities this year but no upgrades. That's due to "declining state funding, flat or declining enrollment and lack of expense containment," the agency said.

The outlook may be a bit better for private colleges and universities: there have been nine upgrades of privates but still 13 downgrades. "Certain private universities have been able to establish a strong market presence and grow net tuition revenue leading to healthy operating margins and improved financial resources," Moody's said. "Others have struggled with stagnant net tuition revenue and lack of expense control leading to thinner liquidity and weaker balance sheets."


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