Moody's Considers Change in Rating Methodology

July 10, 2015

Moody's is considering changing the approach it uses to rate the financial health of more than 500 colleges and universities. The investors' service put out a call for comments on potential methodology changes on Wednesday.

If changes occur as proposed, Moody's predicts an updated formula will affect the ratings of about 5 percent of the postsecondary institutions it rates. The proposed changes include a scorecard that rates institutions based on their market profile, operating performance, wealth and liquidity, and the strength and diversity of their funding sources as well as their risk appetite.

Moody's rates 230 four-year public universities and university systems in the U.S., 275 nonprofit private colleges and universities, and 21 universities outside of the U.S. Combined, these organizations had approximately $235 billion of debt outstanding as of the end of the 2014 fiscal year.

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