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:
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
- U.S. Not-For-Profit Public College And University Fiscal 2023 Medians: Rising State Funding Offers Hope Amid Continued Demand Pressures, July 18, 2024
- U.S. Not-For-Profit Private College And University Fiscal 2023 Medians: Inflated Expenses, Deflated Support Contribute To Weaker Margins, July 18, 2024
- Rising Covenant Violations Are A Symptom Of The Pressure Facing Lower-Rated U.S. Higher Education Entities, June 20, 2024
- Financial Aid Delay Is The Latest Hurdle For U.S. Higher Education, Feb. 12, 2024
- Outlook For Global Not-For-Profit Higher Education: Credit Quality Divergence Continues, Dec. 7, 2023
- Historical Peak Of Negative Outlooks Signals Challenges Remain For U.S. Acute Health Care Providers, Dec. 6, 2023
- U.S. States 2024 Outlook: Credit Stability Endures In Unstable Times, Jan. 4, 2024
- Economic Outlook U.S. Q3 2024: Milder Growth Ahead, June 24, 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: | 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 | |
Additional Contact: | Kwahmyre Barbour, New York; kwahmyre.barbour@spglobal.com |
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