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Moody's Investors Service, one of several ratings agencies that evaluates higher education institutions, updated its methodology for rating colleges and universities.
The new methodology will use the same methods and scorecard to evaluate debt issued by colleges and universities as it does to evaluate revenue-backed debt issued by U.S. community colleges. It will replace Spendable Cash and Investments to Operating Expenses with Total Cash and Investments to Operating Expenses, and replace Spendable Cash and Investments to Total Debt with Total Cash and Investments to Total Adjusted Debt.
The new methodology will also use an annual debt service coverage ratio as a subfactor of leverage and coverage and expand the number of qualitative subfactors and increase their scorecard weights, according to a press release.
A full explanation of the changes can be found on the Moody’s website.
