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

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

S&P Global Ratings took 26 rating actions and maintained 74 ratings in the U.S. not-for-profit higher education sector during the second quarter of 2024. The 26 rating actions are broken out as follows:

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The three upgrades reflect positive enrollment trends, improved demand metrics, consistent operating surpluses, and stronger balance sheet metrics. The two outlook revisions to positive were a result of strengthened demand metrics, improved financial resource ratios, and positive operating performance, while the one outlook revision to stable from negative was spurred by slowly stabilizing enrollment and solid operating surpluses supported by state appropriations. The one upgrade to 'AAA', for Dartmouth College, was a result of the college's excellent demand profile, consistent operating surpluses, and healthy balance sheet metrics.

The 12 downgrades and four outlook revisions to negative from stable were, inversely, spurred by enrollment declines, weakened liquidity, covenant violations, financial resource deterioration, and/or weakened operating performance. The one downgrade to 'D', for Medaille University, was the first S&P-rated college or university technical default since 2015 and was due to Medaille missing the April 2024 interest payment on its series 2013 and 2018 bonds; the school closed in August 2023. The downgrades for Albion College, Columbia College Chicago, and Marymount University were fueled by decreasing enrollment, significant operating deficits, weakened liquidity, and/or elevated supplemental endowment draws or loans.

The two outlook revisions to stable from positive reflect materially lower enrollment projections, operational deficits, or unforeseen merger challenges.

As discussed in our 2024 sector outlook and fiscal 2023 medians reports, credit quality continues to diverge and is consistent with our bifurcated outlook. While higher-rated institutions with strong demand, sound resources, and excellent reputations have maintained or strengthened their positions year-to-date, lower-rated institutions such as less selective, regional institutions face heightened difficulties, including growing competition, higher expenses, and operating margin pressure. Many of these schools were facing enrollment declines prior to the COVID-19 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 was 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 the processing of the Free Application for Federal Student Aid (FAFSA) for the 2024-25 academic year meant that colleges and universities had less time to determine financial aid packages, which has affected enrollment projections for some schools and 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 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

Second-Quarter 2024 U.S. Higher Education Rating Actions
Institution State Rating to Rating from Outlook to Outlook from Description
Albion College MI BB BBB Negative Negative Weakened liquidity, significant structural operating deficits, continued endowment draws for operations, decreasing enrollment
Alfred University NY BBB+ Stable New rating
Baldwin Wallace University OH BBB+ A- Negative Stable Significant operating deficits and supplemental endowment loans that are expected to reoccur
Clemson University SC AA+ AA Stable Positive Rising enrollment, favorable student demand metrics, recurring financial surpluses, ample financial resources with moderate debt
Columbia College Chicago IL BBB- BBB+ Negative Negative Deep operating deficits leading to financial resource deterioration and weakened liquidity, enrollment declines, and highly concentrated revenues create risk
Dartmouth College NH AAA AA+ Stable Positive Excellent enterprise and demand profile, consistent operating surpluses, healthy balance sheet metrics
D'Youville University NY BBB- BBB Stable Stable Weakened financial resource ratios with significant decline in cash and investments
Goodwin University CT BBB- Stable New rating
Houghton University NY BB+ BBB- Stable Stable Large operating deficits and highly restricted financial resources combined with limited demand flexibility
Illinois College IL BBB BBB+ Stable Stable Enrollment declines, operating deficits, and sizable supplemental endowment draws continuing through fiscal 2026
Manchester University IN BBB BBB+ Negative Negative Operating deficits and violation of debt covenant with supplemental draws on endowment to meet covenant
Marymount University VA BB- BB+ Stable Stable Unexpected and significant liquidity decline, additional debt, and material operating deficits
Medaille University NY D CCC NM Negative Missed April 2024 interest payments on series 2023 and 2018 bonds
Mount Saint Mary's University CA A- A Stable Stable Larger operating deficits in fiscal 2023, with expectation for operational pressures to persist
Stetson University FL BBB+ A- Stable Negative Weakened demand profile, enrollment decrease, and operating deficit in fiscal 2023
Sweet Briar College VA BB+ BB Stable Positive Improved enrollment and financial performance and expected improvement of those metrics
Vaughn College of Aeronautics & Technology NY B+ BB- Negative Stable Enrollment declines, weakened operating performance and financial resources, forbearance agreement due to covenant violations

Table 2

Second-Quarter 2024 U.S. Higher Education Outlook Revisions
Institution State Rating Outlook to Outlook from Description
Ferris State University MI A+ Stable Negative Slowly stabilizing enrollment and solid operating surpluses supported by state appropriations
Hiram College OH BB Negative Stable Significantly declining operations leading to a covenant violation, coupled with leadership turnover
Johnson & Wales University RI A- Stable Positive Materially lower enrollment projections and operating deficits expected in fiscal years 2024-2027
Niagara University NY BBB+ Negative Stable Operating deficits and deteriorated balance sheet metrics despite healthy enrollment growth
Saint Joseph's University PA A- Stable Positive Unforeseen challenges with merger and defeasance of combined debt and expectations for operational stability
Saint Michael's College VT BBB- Negative Stable Continued enrollment pressure leading to significant operational deficits and anticipation of high endowment draws to persist
University of Arizona AZ AA- Negative Stable Anticipation of increased deficit operations and pressured liquidity
University of Illinois IL AA- Positive Stable Improved financial resource ratios, consistent positive operating performance, improved revenue diversity, and strengthened demand metrics
University of Oregon OR AA- Positive Stable Growing enrollment and financial resources, solid history of fundraising, and sound research base

Table 3

Second-Quarter 2024 U.S. Higher Education Maintained Ratings
Institution State Rating Outlook
Alvernia University PA BB+ Stable
Amherst College MA AA+ Stable
Arcadia University PA BBB- Stable
Bard College NY BBB- Positive
Bates College ME A+ Stable
Boston College MA AA- Stable
Bryn Mawr College PA AA+ Stable
Buena Vista University IA A Stable
Central Michigan University MI A+ Stable
Fayetteville State University NC A- Stable
Florida Institute of Technology FL BBB- Stable
Governors State University IL BBB Stable
Hampton University VA A Stable
Hawaii Pacific University HI BB Stable
Howard University DC BBB- Positive
Indiana University IN AAA Stable
Inter American University of Puerto Rico PR A- Stable
Kean University NJ A- Stable
Lasell University MA BB Negative
Lehigh University PA AA- Stable
Masters University CA BBB- Stable
Mayville State University ND BBB+ Stable
Medical College of Wisconsin WI AA- Stable
Merrimack College MA BBB- Stable
Messiah University PA A- Stable
Methodist University NC BB Stable
Michigan State University MI AA Stable
Minnesota State Colleges & Universities MN AA- Stable
Missouri State University MO A+ Stable
Molloy University NY BBB Stable
Moravian University PA BBB+ Stable
Mount Aloysius College PA BBB+ Stable
Nevada System of Higher Education NV AA- Stable
New Jersey Institute of Technology NJ A Stable
Nicholls State University LA BBB Stable
Northern Michigan University MI A Stable
Northwestern University IL AA+ Stable
Pace University NY BBB- Stable
Pacific University OR BBB Stable
Quinnipiac University CT A- Stable
Rensselaer Polytechnic Institute NY BBB+ Stable
Saginaw Valley State University MI A Stable
Seattle University WA A Stable
Southern New Hampshire University NH A+ Stable
State University of Iowa IA AA Stable
Stevens Institute of Technology NJ BBB+ Positive
Texas A&M University TX AA+ Stable
Texas A&M University System TX AAA Stable
Trinity College CT A+ Stable
Trinity University TX AA- Stable
Troy University AL A+ Stable
Tulane University LA A+ Stable
University of California CA AA Stable
University of Chicago IL AA- Stable
University of Dubuque IA BBB Negative
University of Indianapolis IN BBB Stable
University of Massachusetts System MA AA- Stable
University of North Alabama AL A Stable
University of Puerto Rico PR CC Negative
University of South Alabama AL A+ Stable
University of Southern California CA AA Stable
University of Utah UT AA+ Stable
University of Vermont & State Agricultural College VT A+ Positive
Vanderbilt University TN AAA Stable
Vassar College NY A+ Stable
Wake Forest University NC AA Stable
Washington College MD BBB Negative
Washington State University WA A+ Stable
Wayland Baptist University TX BBB+ Negative
Wesleyan University CT AA Stable
Wilkes University PA BBB- Stable
Winston-Salem State University NC A- Stable
Wofford College SC A- Stable
Yale University CT AAA Stable

Related Research

This report does not constitute a rating action.

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stefan.turcic@spglobal.com
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laura.kuffler.macdonald@spglobal.com
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Additional Contact:Kwahmyre Barbour, New York;
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