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U.S. Higher Education Rating Actions, 2023

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U.S. Higher Education Rating Actions, 2023

In 2023, S&P Global Ratings assigned six new ratings, raised 12 ratings, and lowered 23 ratings on U.S. colleges and universities. Our rating actions during 2023 pointed to a continued divergence in credit quality for the second year in a row as competition for students increases; expenses rise; and many institutions, especially those that are less selective and more regional, continue to experience budget stress.

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Among the 12 upgrades, we raised the ratings on two Illinois universities to 'BBB-' from 'BB+' based on the state's recovery, which supports improved operating performance and financial resources. In addition, we raised the ratings on two Ohio universities to 'AA-' from 'A+' through the application of our government-related entities (GRE) criteria subsequent to the upgrade on the State of Ohio. The other upgrades were generally a result of stronger demand and financial factors, including enrollment stabilization or growth and improved operational performance and financial resources.

Conversely, the 23 downgrades were caused by sustained enrollment declines, significant operational deficits, and weak financial performance, as well as a debt service covenant violation and the closure of an institution. More than half of the 2023 downgrades occurred in the second quarter.

During 2023, we revised the outlook on 16 institutions to negative. These revisions were due to enrollment pressures and declines, falling net tuition revenue, and weakened financial operations and resources. We revised the outlook on one university to stable from positive due to softer surpluses and modest additional debt.

In addition, we revised the outlook on eight universities to stable from negative based on strengthened demand metrics, improved financial performance, and increased state appropriations. We also revised the outlook on eight universities to positive from stable due mainly to expected or sustained positive operating margins and healthy financial resources.

Finally, we removed one rating from CreditWatch negative and assigned a developing outlook, for Cabrini University, spurred by the announcement that Villanova University had agreed to purchase Cabrini's campus and assume certain assets and liabilities following Cabrini's closure in June 2024.

Almost all institutions returned to normal, on-campus operations in 2023, and 84.3% of institutions have a stable outlook, compared with 9.6% with a negative outlook and 5.8% with a positive outlook. Comparatively, we ended 2019 (pre-pandemic) with 88% of ratings on stable outlook.

Table 1

U.S. higher education 2023 rating action summary
First quarter Second quarter Third quarter Fourth quarter
Rating initially assigned 1 1 3 1
Rating raised; outlook positive 1 0 1 0
Rating raised; outlook stable 4 3 1 2
Rating lowered; outlook stable 3 10 0 0
Rating lowered; outlook negative 1 4 2 3
Rating affirmed; outlook to stable 2 4 2 1
Rating affirmed; outlook to positive 1 2 1 4
Rating affirmed; outlook to negative 3 2 6 5

Rating actions in 2023 indicate a continued bifurcation in credit quality, as enrollment has not recovered uniformly across the higher education sector. Institutions rated 'BBB+' or lower accounted for 70% of the downgrades and 69% of the outlook revisions to negative in 2023. In addition, the ratio of downgrades to upgrades is almost 2:1, and the ratio for unfavorable to favorable outlook revisions is just above 1:1.

Entering 2024, approximately 47% of private university issuers are rated 'BBB+' or below. This compares with almost 47% of public universities within the 'A' rating category, and only 10% rated 'BBB+' or lower. Highly selective institutions benefit from significant demand and financial flexibility, while less selective and highly regional institutions with weak balance sheets face greater credit risk. Mixed enrollment trends have affected revenues, and demographics will continue to shrink the possible applicant pool. Rising expenses and labor shortages continue to pressure operations for institutions.

Chart 1

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Table 2

U.S. higher education ratings initially assigned
Institution State Rating Outlook
Anna Maria College MA BB Stable
Rose-Hulman Institute of Technology IN A- Stable
Southeastern University FL BB Stable
The College of Idaho ID BBB Stable
University of Detroit Mercy MI BBB Stable
University of Tulsa OK A- Stable

Table 3

U.S. higher education ratings raised
Institution State Rating to Rating from Outlook to Outlook from Description
Bard College NY BBB- BB+ Positive Positive Improved demand metrics, operating performance, and growth in available resources due in large part to successful fundraising
Bowling Green State University OH AA- A+ Stable Stable ICR raised based on application of GRE criteria after raising rating on Ohio to 'AAA' from 'AA+'
Eastern Illinois University IL BBB- BB+ Stable Stable Stabilizing enrollment and improved operations supported by the financial recovery of the State of Illinois
Eastern University PA BBB- BB+ Stable Stable Enrollment growth and improved operating performance spurred by net tuition revenue growth
Fairfield University CT A A- Stable Positive Improved market position and demand profile contributing to consistent full-accrual operating surpluses
George Mason University VA AA- A+ Stable Positive Growth in available resource ratios coupled with full-accrual surpluses and stable demand profile
Kent State University OH AA- A+ Stable Stable ICR raised based on application of GRE criteria after raising rating on Ohio to 'AAA' from 'AA+'
Lake Forest College IL BBB BBB- Stable Stable Continued enrollment growth and net tuition revenue increases in recent years, sustained solid cash and investments
Lindsey Wilson College KY BBB BBB- Stable Stable Recent enrollment growth, which is expected to continue, and improved financial resources relative to debt
Long Island University NY A- BBB+ Stable Stable Operating surpluses resulting in improved financial resources
St. John's College MD BBB+ BBB Positive Positive Sustained improved financial performance and a material increase in financial resources
Western Illinois University IL BBB- BB+ Stable Stable Stabilizing enrollment and improved operations supported by the financial recovery of the State of Illinois
ICR--Issuer credit rating.

Table 4

U.S. higher education ratings lowered
Institution State Rating to Rating from Outlook to Outlook from Description
Albion College MI BBB BBB+ Negative Stable High management turnover, extraordinary endowment draws, and expectations for enrollment declines and significant deficits
Arcadia University PA BBB- BBB Stable Negative Enrollment declines contributing to operating pressures and weakening financial resource ratios; continued supplemental endowment draws
Belmont University TN A A+ Stable Stable Weakened financial resources relative to pro forma debt spurred by material increases in debt
Catholic University of America DC A- A Stable Negative Steady declines in enrollment pressuring operating performance despite ongoing supplemental endowment draws
Doane University NE A- A Stable Negative Continued enrollment and operating deficits combined with an increase in debt
Drexel University PA BBB+ A- Stable Stable Additional debt issued from operating leases that weakened financial resources compared with medians
Earlham College IN A- A Stable Negative Ongoing supplemental endowment draws coupled with enrollment declines and high tuition discounting
Gallaudet University DC A- A Stable Negative Elevated capital spending plans coupled with consistantly declining enrollment
Harrisburg University of Science and Technology PA BB- BB Negative Stable Material enrollment declines, weakening financial performance, and expected operating deficit, exposing university to debt acceleration risk
Hartwick College NY BB BB+ Stable Negative Enrollment declines, declining demand metrics, and pressured operations despite consistently elevated endowment draws
Jacksonville State University AL BBB BBB+ Stable Stable Additional debt issued weakening financial resources compared with those of medians and peers
La Salle University PA BB- BB Stable Negative Continued decline in enrollment and persistent operating deficits threatening the university's liquidity
Lesley University MA BBB BBB+ Negative Stable Anticipated negative margins over the next few years and pressured and weakening undergraduate demand profile
Manhattan College NY BBB+ A- Stable Negative Continued enrollment declines and operational pressures in recent years
Medaille University NY BB- BB Negative Stable Ongoing governance risks coupled with enrollment declines and weakened balance sheet
Medaille University NY CCC BB- Negative Negative Obligations highly vulnerable to nonpayment given the university's announcement that it would close on Aug. 31, 2023
Saint Leo University FL BB BB+ Negative Stable Enrollment declines and deficits resulting in debt service covenant violation, extraordinary endowment draws, and heightened liquidity challenges
Seattle Pacific University WA BBB BBB+ Negative Negative Elevated social risks causing significant enrollment declines and large deficits, which are expected to continue
Simmons University MA BBB- BBB Negative Stable Operating deficits and weakened financial resources pressured by declining graduate enrollment
St. Michael's College VT BBB- BBB Stable Negative Enrollment pressure resulting in significant declines and full-accrual operating deficits
Thomas M. Cooley Law School MI B- BB- Negative Negative Severe enrollment declines and extremely weak operations resulting in a debt service covenant violation
University of Hartford CT BB+ BBB- Negative Negative Widening operating deficits, weakening liquidity position, and recent enrollment and demand pressure
University of St. Thomas TX BBB BBB+ Stable Negative Consistantly pressured operations on a full-accrual basis and weakening balance sheet ratios

Table 5

U.S. higher education outlook revisions
Institution State Rating Outlook to Outlook from Description
Alabama State University AL BBB- Positive Stable Continued financial resources growth relative to operating expenses and debt along with solid operating surpluses
Assumption University MA A- Negative Stable Decreasing enrollment and continued and increased reliance on endowment for operations planned in near term
Baylor University TX A+ Positive Stable Balance sheet growth and a trend of full-accrual positive operating performance supported by solid fundraising
Benedictine University IL BBB- Negative Stable Expectation for continued operating deficits in the near term coupled with weak financial resource ratios
Boston University MA AA- Positive Stable Improvement in enrollment and demand metrics contributing to healthy margins
Cabrini University PA BBB- CreditWatch negative Stable Uncertainty as the university plans to close in June 2024
Cabrini University PA BBB- Developing CreditWatch negative Villanova University agreed to purchase Cabrini’s campus upon closure and assume assets and liabilities
Chatham University PA BBB- Negative Stable Operating deficits expected in near term, increased reliance on endowment and board-designated funds for operations
Goucher College MD BBB+ Negative Stable Weakened financial operations spurred by sharp enrollment declines and expectation of continued deficits
Guilford College NC BBB- Stable Negative Stable enrollment and demand metrics, along with consistently positive operations
Hobart and William Smith Colleges NY A- Negative Stable Enrollment declines contributing to very weak operating performance and larger endowment draws
Kettering University MI A- Negative Stable Continued enrollment pressure resulting in operating deficits
Lake Superior State University MI BBB+ Negative Stable Elevated social risk, as increased demographic pressure contributes to significant enrollment declines and deficit operations
Loyola University Maryland MD A Negative Stable Increased discounting, declining net tuition revenue, continued full-accrual deficits, and potential additional debt
Marian University IN BBB Stable Positive Softer surpluses and modest additional debt will keep the university's balance sheet in line with the current rating
Mercyhurst University PA BB Negative Stable Potential for covenant violation and debt acceleration given large enrollment declines and operating deficits
Meredith College NC BBB+ Negative Stable Material declines in full-time-equivalent enrollment since fall 2019 that has pressured financial operations
Neumann University PA BBB Negative Stable Unexpected decline in financial resources due to market fluctuation and additional debt in 2022
Oberlin College OH AA- Stable Negative Solid student demand with stabilizing financial performance
Ohio University OH A+ Stable Negative Enrollment increase in fall 2023 and appointment of permanent personnel in several key leadership roles
Ramapo College NJ A Stable Negative Balanced operations supported by expense management and increased state appropriations
Rider University NJ BB Negative Stable Significant decline in financial resources spurred by operating losses constraining liquidity and the ability to fulfill its financial obligations
Rutgers University NJ A+ Stable Negative Improvement in student demand metrics and program expansion translated to positive operations
Stetson University FL A- Negative Stable Weakened demand potentially leading to operating deficits or deterioration of financial resources
University of Dubuque IA BBB Negative Stable Significant enrollment declines coupled with ongoing pressure on operations
University of Houston System TX AA Positive Stable Expectation of increased financial resources as a result of state's approved Texas University Fund
University of Northern Colorado CO A- Stable Negative Solid financial resources and increasing state support helping to offset enrollment declines
University of Northern Iowa IA A Positive Stable Growth in financial resource ratios and stable enrollment potentially leading to improved operations
University of Rhode Island RI A+ Stable Negative Return to breakeven operating performance and growth in financial resoures due to stabilizing enrollment
University of Southern California CA AA Stable Negative Improved available resources due to solid operating performance and fundraising
University of Tampa FL A- Positive Stable Consistent, robust operating margins and improved demand profile, with impressive enrollment growth
University of Vermont & State Agricultural College VT A+ Positive Stable Positive operations and improving financial resources due to successful fundraising and enrollment growth
Wayland Baptist University TX BBB+ Negative Stable Weakening enrollment and financial operations pressured by net tuition revenue declines
Western Michigan University MI A Positive Stable Positive operations and healthy levels of financial resources despite enrollment pressures

Table 6

U.S. higher education ratings maintained
Institution State Rating Outlook
First quarter
Arizona State University AZ AA Stable
Auburn University AL AA- Stable
Ave Maria University FL BBB- Stable
Babson College MA A+ Stable
Bates College ME A+ Stable
Bismarck State College ND A Stable
Buena Vista University IA A Stable
California Institute of Technology CA AA- Stable
California State University CA AA- Stable
Colorado State University System CO A+ Stable
Concordia University Irvine CA BBB+ Stable
Duquesne University PA A Stable
East Carolina University NC AA- Stable
Eastern Kentucky University KY A- Stable
Ferris State University MI A+ Negative
Florida International University FL AA- Stable
Florida State University FL AA+ Stable
George Fox University OR A- Stable
Georgetown University DC A- Stable
Georgian Court University NJ BBB- Stable
Harvard University MA AAA Stable
Hofstra University NY A Stable
Howard University DC BBB- Positive
Illinois State University IL A- Positive
Inter American University of Puerto Rico PR A- Stable
Kean University NJ A- Stable
Lawrence Technological University MI BBB- Stable
Lewis & Clark College OR A- Stable
Loyola University LA BBB Stable
Marymount University VA BB+ Stable
Medical College of Wisconsin WI AA- Stable
Methodist University NC BB Stable
Middlebury College VT AA Stable
Moravian University PA BBB+ Stable
Nevada System of Higher Education NV AA- Stable
Niagara University NY BBB+ Stable
Northeastern Illinois University IL BB+ Stable
Northern Arizona University AZ A+ Stable
Northern Michigan University MI A Stable
Oklahoma City University OK BBB- Stable
Oklahoma State University OK AA- Stable
Pacific Lutheran University WA BB Negative
Providence College RI A Stable
Purdue University IN AAA Stable
Rensselaer Polytechnic Institute NY BBB+ Stable
Rice University TX AAA Stable
Roanoke College VA BBB+ Stable
Saginaw Valley State University MI A Stable
Saint Francis University PA BBB Stable
Seattle University WA A Stable
Southeast Missouri State University MO A Stable
St. John's University NY A- Stable
Syracuse University NY AA- Stable
Texas Tech University System TX AA+ Stable
The Juilliard School NY AA Stable
Trinity University TX AA- Stable
Tulane University LA A+ Stable
University of California CA AA Stable
University of Chicago IL AA- Stable
University of Denver CO A+ Stable
University of New Mexico NM AA- Stable
University of Oklahoma OK A+ Stable
University of Oklahoma Health Sciences Center OK AA- Stable
University of Oregon OR AA- Stable
University of Texas System TX AAA Stable
University of Washington WA AA+ Stable
Western Carolina University NC A+ Stable
Wilkes University PA BBB- Stable
Yale University CT AAA Stable
Second quarter
Allegheny College PA A- Stable
American University DC A+ Stable
Belmont University TN A Stable
Boston College MA AA- Stable
Bradley University IL BBB+ Stable
Brown University RI AA+ Stable
California State University CA AA- Stable
Carnegie Mellon University PA AA Positive
Centre College of Kentucky KY A Stable
Chaminade University HI BB+ Stable
Clemson University SC AA Positive
College For Creative Studies MI BBB+ Stable
College of New Jersey NJ A Stable
College of the Holy Cross MA AA- Stable
College of William & Mary VA AA Stable
Columbia University NY AAA Stable
Delaware State University DE BBB- Stable
Denison University OH AA Stable
DePaul University IL A Stable
Drake University IA A- Stable
Duke University NC AA+ Stable
D'Youville University NY BBB Stable
Emerson College MA BBB+ Stable
Fordham University NY A Stable
Grand Valley State University MI A+ Stable
Haverford College PA AA- Stable
Houghton University NY BBB- Stable
Illinois Wesleyan University IL A- Stable
Indiana University IN AAA Stable
Iowa State University of Science & Technology IA AA Stable
Johns Hopkins University MD AA Stable
Juniata College PA BBB Stable
Kenyon College OH A Stable
King's College PA BBB Stable
Knox College IL BBB+ Stable
Lewis University IL BBB Stable
Loma Linda University CA A Stable
Michigan State University MI AA Stable
Midwestern University IL A+ Positive
Morgan State University MD A+ Stable
Mount Vernon Nazarene University OH BBB+ Stable
Nevada System of Higher Education NV AA- Stable
New York University NY AA- Stable
Pepperdine University CA AA- Stable
Princeton University NJ AAA Stable
Reed College OR AA- Stable
Rosalind Franklin University of Medicine & Science IL BBB+ Stable
Sarah Lawrence College NY BBB- Stable
Southern Methodist University TX AA- Stable
Southern New Hampshire University NH A+ Stable
St. Ambrose University IA A- Stable
Stanford University CA AAA Stable
Swarthmore College PA AAA Stable
The New School NY BBB+ Stable
The Pennsylvania State University PA AA Stable
Universidad del Sagrado Corazon PR BB Stable
University of Alabama Huntsville AL AA- Stable
University of Findlay OH BBB- Stable
University of Florida FL AA+ Stable
University of Maine System ME AA- Negative
University of Montevallo AL A- Stable
University of North Carolina at Greensboro NC A+ Stable
University of Rochester NY AA- Stable
University of Southern California CA AA Stable
University of Texas System TX AAA Stable
University of the South (Sewanee) TN A+ Stable
University of Utah UT AA+ Stable
University System of New Hampshire NH A+ Stable
Ursinus College PA BBB Stable
Vanderbilt University TN AAA Stable
Virginia Polytechnic Institute & State University VA AA Stable
Washington & Lee University VA AA Stable
Wayne State University MI A+ Stable
Wellesley College MA AA+ Stable
West Virginia University WV A Stable
Worcester Polytechnic Institute MA A Stable
Yale University CT AAA Stable
Third quarter
Auburn University AL AA- Stable
Ball State University IN AA- Stable
Berklee College of Music MA A Stable
Boise State University ID A+ Stable
Bryant University RI A- Stable
Case Western Reserve University OH AA- Stable
Cleveland Institute of Art OH BB Stable
Cleveland Institute of Music OH BBB- Stable
Des Moines University Osteopathic Medical Center IA BBB+ Stable
Dickinson College PA A+ Stable
Earlham College IN A- Stable
Elizabethtown College PA BBB- Stable
Florida State University System FL AA+ Stable
Franciscan University of Steubenville OH A Stable
Gettysburg College PA A Stable
Hampden-Sydney College VA A Stable
Hendrix College AR BBB- Negative
Holy Family University PA A- Stable
Icahn School of Medicine at Mount Sinai NY A- Stable
Indiana University of Pennsylvania PA BBB+ Stable
Lafayette College PA A+ Stable
Lehigh University PA AA- Stable
Marywood University PA BB+ Stable
Massachusetts Institute of Technology MA AAA Stable
Mount Saint Mary's University MD BB+ Stable
Nebraska State College NE A Stable
New York Law School NY BBB- Stable
North Carolina State University at Raleigh NC AA Stable
Northern Arizona University AZ A+ Stable
Ohio State University OH AA Stable
Olin College of Engineering MA A Stable
Queen's University of Charlotte NC BBB Stable
Randolph College VA BBB+ Stable
Roseman University of Health Sciences NV BB Stable
Southern California Institute of Architecture CA BBB+ Stable
Southern Illinois University IL BBB+ Stable
Springfield College MA BBB Negative
St. Louis University MO AA- Stable
State University of Iowa IA AA Stable
Temple University PA A+ Stable
University of California CA AA Stable
University of Central Missouri MO A+ Stable
University of Evansville IN BBB- Stable
University of Florida FL AA+ Stable
University of Kansas KS AA- Stable
University of Massachusetts System MA AA- Stable
University of Michigan MI AAA Stable
University of Nebraska System NE AA Stable
University of New Haven CT BBB- Stable
University of Portland OR A Stable
University of Puget Sound WA A+ Stable
University of Richmond VA AA+ Stable
University of Virginia VA AAA Stable
Vaughn College of Aeronautics & Technology NY BB- Stable
Virginia Commonwealth University VA AA- Stable
Washington State University WA A+ Stable
Washington University MO AA+ Stable
Wayne State University MI A+ Stable
Wingate University NC BBB- Stable
Fourth quarter
A.T. Still University MO A Stable
Adelphi University NY A- Stable
Agnes Scott College GA A- Stable
Albany Law School NY BBB Stable
Bethel University MN BB+ Stable
Brandeis University MA A+ Stable
Butler University IN A- Stable
Carlow University PA BBB- Stable
Cleveland State University OH A+ Stable
Colorado School of Mines CO A+ Stable
Colorado State University System CO A+ Stable
Cornell University NY AA Stable
Dominican University IL BBB- Stable
Duke University NC AA+ Stable
Duquesne University PA A Stable
Franklin & Marshall College PA A+ Negative
Gwynedd Mercy University PA BBB Stable
High Point University NC A- Stable
Hope College MI A Stable
Lenoir-Rhyne College NC BBB Stable
Lynchburg University VA BBB+ Negative
Marshall B. Ketchum University CA A- Stable
MCPHS University MA AA Stable
Mercy University NY A Stable
Metropolitan State University of Denver CO A Stable
Nazareth College of Rochester NY BBB+ Stable
New England Institute of Technology RI A- Stable
Pace University NY BBB- Stable
Pennsylvania College of Technology PA A Stable
Pomona College CA AAA Stable
Randolph-Macon College VA A Stable
Sacred Heart University CT A Stable
Saint Mary's College CA BBB- Stable
Seton Hall University NJ BBB+ Stable
Southern Methodist University TX AA- Stable
Southwest Baptist University MO BBB- Negative
St. John Fisher University NY A- Stable
Tiffin University OH BBB- Stable
Transylvania University KY A- Stable
Tufts University MA AA- Stable
University of Alabama AL AA Stable
University of Alabama Birmingham AL AA+ Stable
University of Connecticut CT A+ Stable
University of Dayton OH A+ Stable
University of Delaware DE AA+ Stable
University of Louisana at Lafayette LA A- Stable
University of Miami FL A- Stable
University of Missouri MO AA+ Stable
University of North Carolina at Chapel Hill NC AAA Stable
University of North Florida FL A Stable
University of Pennsylvania PA AA+ Stable
University of Pittsburgh of the Commonwealth System of Higher Education PA AA+ Stable
University of Rochester NY AA- Stable
University of South Florida FL AA Stable
University of Southern Indiana IN A Stable
University of Toledo OH A Stable
University of Wyoming WY AA- Stable
Villanova University PA AA- Stable
Widener University PA BBB Stable
Wofford College SC A- Stable
Yeshiva University NY BBB- Stable
York College of Pennsylvania PA A- Stable

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Stefan Turcic, New York (1) 212-438-0559;
stefan.turcic@spglobal.com
Secondary Contacts:Laura A Kuffler-Macdonald, New York + 1 (212) 438 2519;
laura.kuffler.macdonald@spglobal.com
Jessica L Wood, Chicago + 1 (312) 233 7004;
jessica.wood@spglobal.com

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