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.
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
- Financial Aid Delay Is The Latest Hurdle For U.S. Higher Education, February 12, 2024
- Outlook For Global Not-For-Profit Higher Education: Credit Quality Divergence Continues, December 7, 2023
- Historical Peak Of Negative Outlooks Signals Challenges Remain For U.S. Not-for-Profit Acute Health Care Providers, December 6, 2023
- U.S. States 2024 Outlook: Credit Stability Endures In Unstable Times, January 4, 2024
- Economic Outlook U.S. Q2 2024: Heading For An Encore, March 26, 2024
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: | 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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