Just recently, College Insurrection reported alleged mismanagement of finances at Howard University. Now the school is facing a possible credit-rating downgrade from Moody’s.

Nick Anderson of the Washington Post reports.

Moody’s reviews Howard University for a possible credit-rating downgrade

Moody’s Investors Service is reviewing data on Howard University for a possible downgrade of its credit rating, another sign of fiscal challenges at the historically black school in Northwest Washington.

Since 2011, Moody’s has assigned an A3 rating to about $290 million in bonds issued as Howard was planning upgrades to its campus. That rating, the seventh-highest on the 21-level Moody’s scale, indicates that there is a low risk the university will default on its debt. A shift to the next-lower rating level, if it occurs, would suggest a moderate credit risk.

The review “reflects Howard University’s extremely pressured environment,” Moody’s said in a statement Monday, citing an enrollment decline, cuts in federal funding and a drop in the university hospital’s usage. Weighing on the university is an expected $25 million funding reduction related to the federal budget sequester.

University officials said demand for a Howard education remains strong.

“Like most universities today, Howard University faces revenue challenges,” university spokeswoman Kerry-Ann Hamilton said Tuesday, “but we remain engaged in a proactive and aggressive multi-pronged and multi-year effort to address those pressures, which has resulted in four consecutive years of positive operating results and an endowment that is above pre-recession levels.”

In January, Moody’s expressed a negative outlook for the entire sector of higher education, saying that even market leaders face “diminished prospects for revenue growth.” But conditions vary from school to school: In February, Boston University was upgraded to an A1 rating, and in March, Northern Illinois University was downgraded to A3.


 
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