During the third quarter of 2020 (July 1-Sept. 30), S&P Global Ratings maintained 25 ratings and took 16 rating actions in the U.S. not-for-profit higher education sector. Of the 16 rating actions, six were downgrades, five were outlook revisions to negative, one was an outlook revision to stable, two were assignments of new ratings, and two were rating withdrawals.
On Aug. 18, 2020, we published "Not-For-Profit Higher Education Mid-Year Sector View: Fall 2020 Enrollments Will Drive Credit," which outlines S&P Global Ratings' observations from the first half of the year and expectations going forward. The report posits that weakened enrollments due to COVID-19-related social distancing measures will pressure net tuition and auxiliary revenues through fiscal 2021 and beyond. In addition, as the uneven economic recovery continues, philanthropy may stumble while lower state revenues could lead to cuts in appropriations to public colleges and universities. In the face of expected revenue declines, institutions have been curtailing expenses; instituting hiring freezes; and, in some cases, have discussed or executed furloughs and layoffs. Through the second half of the year, we expect financial operations will become increasingly challenging for more colleges and universities. Although the Coronavirus Aid, Relief, and Economic Security (CARES) Act did provide $14 billion in federal relief funds directly to institutions, for most colleges and universities, lost revenue from room and board and other auxiliary sources was much more material than new costs related to COVID-19. As the coronavirus and enrollment landscapes evolve, support from the federal government will remain a critical part of the overall financial health of colleges and universities.
We expect to continue to update our credit rating opinions as economic data, visibility on fall enrollment, and fiscal 2021 forecasts become available, in line with our methodology and policies. We continue to assess the pandemic's impact on the creditworthiness of the not-for-profit higher education sector and could take further actions on specific issuers or groups of issuers as more details become available. Any rating change will include a full review of an entity's individual credit characteristics.
The following tables summarize S&P Global Ratings' quarterly rating actions for U.S. higher education issuers. All rating actions, outlooks, and maintained ratings are based on our "Methodology: Not-For-Profit Public and Private Colleges and Universities" criteria, published Jan. 6, 2016.
Table 1
Third-Quarter 2020 U.S. Higher Education Rating Actions And Outlook Revisions | |||||||
---|---|---|---|---|---|---|---|
Institution | State | Rating to | Rating from | Outlook to | Outlook from | Rating action | Description |
Brown University |
RI | AA+ | AA+ | Negative | Stable | Rating affirmed; outlook revised to negative | Pressured balance sheet ratios due to increase in debt |
Des Moines University Osteopathic Medical Center |
IA | BBB+ | Stable | Rating initially assigned | New rating | ||
D'Youville College |
NY | BBB | Stable | Rating initially assigned | New rating | ||
East Carolina University |
NC | AA- | AA- | Negative | Stable | Rating affirmed; outlook revised to negative | Pressured enrollment; weakening selectivity and matriculation; decline in available resource ratios |
Hendrix College |
AR | BBB- | BBB | Negative | Negative | Rating lowered | Six consecutive years of enrollment decline; high tuition discount rate; accelerating negative operating performance |
Idaho State University |
ID | NR | A+ | NR | Stable | Rating withdrawn | Rating withdrawn at issuer's request |
Lewis University |
IL | BBB | BBB+ | Stable | Negative | Rating lowered; outlook revised to stable | Softening operating performance and reliance on credit lines; deteriorating operating liquidity |
Manchester University |
IN | BBB+ | A- | Stable | Negative | Rating lowered; outlook revised to stable | Declining enrollment and demand metrics; increasing deficits that could be exacerbated by pandemic |
Morgan State University |
MD | A+ | A+ | Negative | Stable | Rating affirmed; outlook revised to negative | Continued operating deficits; pressured balance sheet due to recent loans and new housing project |
Ranken Technical College |
MO | NR | A- | NR | Stable | Rating withdrawn | Rating withdrawn at issuer's request |
Regent University |
VA | BB+ | BB+ | Stable | Negative | Rating affirmed; outlook revised to stable | Significant enrollment growth; health operating surpluses without utilizing endowment draws |
Rider University |
NJ | BB+ | BBB- | Negative | Negative | Rating lowered | Trend of operating deficits expected to continue; increased debt led to pressured available resource ratios |
Sarah Lawrence College |
NY | BBB- | BBB | Stable | Negative | Rating lowered; outlook revised to stable | Additional debt pressures available resource ratios; pandemic and economic conditions could pressure enrollment and operating performance |
Trinity University |
TX | AA- | AA | Stable | Stable | Rating lowered | Series 2020 issuance led to decreased available resource ratios; expected future capital spending |
University of Rochester |
NY | AA- | AA- | Negative | Stable | Rating affirmed; outlook revised to negative | Softening operations in fiscal 2020; weak available resources relative to expenses and pro forma debt |
Wayne State University |
MI | A+ | A+ | Negative | Stable | Rating affirmed; outlook revised to negative | Accreditation issues with School of Medicine; pressure at board level; thinning available resources and operating margins |
Table 2
Third-Quarter 2020 U.S. Higher Education Maintained Ratings | |||
---|---|---|---|
Institution | State | Rating | Outlook |
Bates College |
ME | A+ | Stable |
California State University |
CA | AA- | Stable |
DePaul University |
IL | A | Stable |
Duquesne University |
PA | A | Stable |
Fairfield University |
CT | A- | Stable |
Harrisburg University of Science and Technology |
PA | BB | Negative |
Illinois State University |
IL | A- | Negative |
Jacksonville State University |
AL | A- | Negative |
Lafayette College |
PA | A+ | Stable |
Lehigh University |
PA | AA- | Stable |
Loma Linda University |
CA | A | Stable |
Michigan State University |
MI | AA | Negative |
New York Institute of Technology |
NY | BBB+ | Stable |
Quinnipiac University |
CT | A- | Stable |
Reed College |
OR | AA- | Stable |
Sacred Heart University |
CT | A | Stable |
Saint Elizabeth University |
NJ | BB | Negative |
St. Louis College of Pharmacy |
MO | BBB | Negative |
St. Louis University |
MO | AA- | Negative |
Sweet Briar College |
VA | BB- | Stable |
Texas A&M University System |
TX | AAA | Stable |
University of Chicago |
IL | AA- | Stable |
University of Southern Indiana |
IN | A | Stable |
University of Virginia |
VA | AAA | Stable |
Winston-Salem State University |
NC | BBB+ | Negative |
Related Research
- Outlooks Revised On Certain U.S. Not-For-Profit Higher Education Institutions Due To COVID-19 Impact, April 30, 2020
- U.S. Not-For-Profit Higher Education Sector Confronts An Unprecedented Loss Of Revenue And An Uncertain Recovery, May 15, 2020
- U.S. Not-For-Profit Higher Education Outstanding Ratings And Outlooks As Of July 30, 2020, July 30, 2020
- Not-For-Profit Higher Education Mid-Year Sector View: Fall 2020 Enrollments Will Drive Credit, Aug. 18, 2020
- U.S. Higher Education Rating Actions, First Quarter 2020, April 14, 2020
- U.S. Higher Education Rating Actions, Second Quarter 2020, July 17, 2020
This report does not constitute a rating action.
Primary Credit Analyst: | Jessica L Wood, Chicago (1) 312-233-7004; jessica.wood@spglobal.com |
Secondary Contacts: | Laura A Kuffler-Macdonald, New York (1) 212-438-2519; laura.kuffler.macdonald@spglobal.com |
Nicholas K Fortin, Boston + 1 (312) 914 9629; Nicholas.Fortin@spglobal.com |
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