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U.S. Higher Education Rating Actions, First-Quarter 2024

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U.S. Higher Education Rating Actions, First-Quarter 2024

S&P Global Ratings took 20 rating actions and maintained 73 ratings in the U.S. not-for-profit higher education sector during the first quarter of 2024. The 20 rating actions include one rating withdrawal and are broken out as follows.

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The two upgrades reflect improved demand metrics, positive enrollment trends, and consistent operating surpluses. The two outlook revisions to positive related to growth in financial resources and stabilization of enrollment, while the two outlook revisions to stable from negative were spurred by the anticipation of stabilization of enrollment and improvement of balance-sheet metrics.

The five downgrades and five outlook revisions to negative from stable were, inversely, spurred by pressured or materially weakened operating margins, enrollment declines, increased debt levels, and/or covenant violations.

The three outlook revisions to stable from positive reflect potential balance-sheet pressure, anticipated additional debt, and/or slower enrollment growth.

As discussed in our 2024 sector outlook, we forecast a continued, bifurcated sector. While institutions with strong demand, sound resources, and excellent reputations have maintained or strengthened their positions year to date, we anticipated that less selective, regional institutions will continue to struggle amid growing competition, higher expenses, and operating margin pressure. Many of these schools were facing enrollment declines pre-pandemic, and consistent and material enrollment decreases have been causing deepening deficits. We expected that liquidity and bond covenant pressures could increase for weaker institutions if expense growth is unmatched by revenue growth, which can cause rating stress, particularly if breached covenants lead to collateral posting or acceleration of debt.

Exacerbating enrollment uncertainties, delays and errors in processing student applications for financial aid (FAFSA) for the 2024-2025 academic year mean that colleges and universities have less time to determine financial aid packages, which could affect matriculation rates and operating budgets.

The following tables summarize S&P Global Ratings' quarterly rating actions for U.S. not-for-profit higher education issuers. The following rating actions, outlooks, and maintained ratings are based on our "Global Not-For-Profit Education Providers" criteria, published April 24, 2023, on RatingsDirect.

Table 1

First-Quarter 2024 U.S. Higher Education Rating Actions
Institution State Rating to Rating from Outlook to Outlook from Description
Albany College of Pharmacy and Health Sciences NY BBB BBB+ Stable Negative Ongoing enrollment challenges leading to full-accrual operating deficits and weakened financial resources
Barton College NC BB+ BBB- Stable Stable Worsening financial resources leading to covenant violations, and worsening selectivity and matriculation following application declines
Carnegie Mellon University PA AA+ AA Stable Positive Improved enrollment, matriculation, and selectivity, consistent surpluses, and balance-sheet stability despite significant capital investment
Flagler College FL BBB+ A- Stable Stable Weakened balance sheet from drawdown on cash and investments, substantial increase in debt, and continuous enrollment declines
Lycoming College PA BBB+ A- Stable Negative Weakened operating performance and pressured enrollment from high tuition discounting and small enrollment base
Montana State University MT AA- A+ Stable Positive Impressive growth in cash and investments, consistent operating surpluses, and positive enrollment trends
New York Institute of Technology NY BBB BBB+ Stable Stable Increased debt levels and associated weakening of financial resource ratios relative to debt
Willamette University OR NR BBB NR Stable Rating withdrawn at issuer's request

Table 2

First-Quarter 2024 U.S. Higher Education Outlook Revisions
Institution State Rating Outlook to Outlook from Description
Baylor College of Medicine TX A Stable Positive Potential balance-sheet pressure with campus expansion plans supported by new debt and other resources
Champlain College VT BBB- Negative Stable Potential enrollment declines resulting in operating pressure and weakening financial resources
Colby College ME AA Stable Positive Modest operating performance, declines in financial resources, rising capital expenditures, and somewhat high debt burden
Emory University GA AA Negative Stable Ongoing financial operating deficits at Emory Health Care, accounting for approximately two-thirds of total revenue
Houston Christian University TX BBB- Stable Positive Anticipated additional debt plans without commensurate increase in financial resources and slower enrollment growth
Kansas State University KS A+ Positive Stable Strong and growing financial resources, stabilizing enrollment, and improved state support
Missouri Southern State University MO BBB- Stable Negative Balance-sheet ratios and FTE enrollment growth with expectations of continued demand metrics stabilization
Rhodes College TN A+ Negative Stable Weakened operating results from enrollment variability, rising tuition discounting, and increasing operating expenses
Saint Elizabeth University NJ BB Negative Stable Weakened operating performance from significant enrollment declines which triggered a covenant violation
St. Edwards University TX BBB Stable Negative Positive operations leading to financial resource growth and potential for enrollment stability
St. Lawrence University NY A Negative Stable Sustained enrollment declines and larger operating deficits that are expected to continue
Taylor University IN A- Positive Stable Improved balance sheet, recent enrollment growth, and solid demand metrics
FTE--Full-time equivalent.

Table 3

First-Quarter 2024 U.S. Higher Education Maintained Ratings
Institution State Rating Outlook
Arizona State University AZ AA Stable
Augustana University SD BBB- Stable
Babson College MA A+ Stable
Baylor University TX A+ Positive
Bradley University IL BBB+ Stable
Bryant University RI A- Stable
Calvin University MI A- Stable
Capital University OH BBB- Stable
Colgate University NY AA Stable
Colorado College CO AA Stable
Colorado School of Mines CO A+ Stable
Cornell University NY AA Stable
Davidson College NC AA+ Stable
Fisher College MA BBB+ Stable
Gannon University PA BBB+ Stable
George Washington University DC A+ Stable
Grinnell College IA AAA Stable
Harvard University MA AAA Stable
Iona University NY BBB Stable
Iowa State University IA AA Stable
Kansas City Art Institute MO A- Stable
La Salle University PA BB- Stable
Lipscomb University TN BBB- Stable
Loyola University of Chicago IL A+ Stable
Lubbock Christian University TX BBB- Negative
McDaniel College MD BBB Positive
Mercer University GA A- Stable
Milwaukee School of Engineering WI A- Stable
Missouri Western State University MO BBB Stable
New Mexico Institute of Mining & Technology NM A+ Stable
New Mexico State University NM A+ Stable
New York University NY AA- Stable
North Carolina State University at Raleigh NC AA Stable
Northern Arizona University AZ A+ Stable
Nova Southeastern University FL A- Stable
Ohio Wesleyan University OH A- Stable
Oklahoma State University OK AA- Stable
Old Dominion University VA A+ Stable
Princeton Theological Seminary NJ AAA Stable
Princeton University NJ AAA Stable
Purdue University IN AAA Stable
Regent University VA BBB Stable
Rice University TX AAA Stable
Ringling College of Art and Design FL BBB Stable
Rowan University NJ A Stable
Saint Mary's College IN A- Stable
Seton Hill University PA BBB- Stable
Smith College MA AA+ Stable
Southeast Missouri State University MO A Stable
St. Bonaventure University NY BBB+ Stable
University of Alaska AK A+ Stable
University of California CA AA Stable
University of Kentucky KY AA+ Stable
University of Minnesota MN AA Stable
University of North Carolina at Greensboro NC A+ Stable
University of Oklahoma OK A+ Stable
University of Oklahoma Health Sciences Center OK AA- Stable
University of Richmond VA AA+ Stable
University of Scranton PA A- Stable
University of Southern California CA AA Stable
University of Texas System TX AAA Stable
University of Washington WA AA+ Stable
University System of Maryland MD AA+ Stable
Valley City State University ND BBB+ Stable
Vanderbilt University TN AAA Stable
Villanova University PA AA- Stable
Washington & Jefferson College PA BBB+ Stable
Western Kentucky University KY A- Stable
Western New England University MA BBB- Stable
Westminster College PA BBB Stable
Westminster University UT BBB- Stable
Williams College MA AA+ Stable
Yale University CT AAA Stable

Related Research

This report does not constitute a rating action.

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stefan.turcic@spglobal.com
Secondary Contacts:Jessica L Wood, Chicago + 1 (312) 233 7004;
jessica.wood@spglobal.com
Laura A Kuffler-Macdonald, New York + 1 (212) 438 2519;
laura.kuffler.macdonald@spglobal.com
Additional Contact:Cheyenne Barber, New York;
cheyenne.barber@spglobal.com

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