Professor Jacobson has been covering the race-incident hoax at Oberlin College.

As the “Higher Education Bubble” continues to burst, several prestigious liberal arts colleges have had their credit ratings downgraded.  One of those colleges is Oberlin.

Perhaps it is “fiscal justice”, as students and parents want to spend tuition dollars on an education instead of progressive activism.

Over the past several months, the credit ratings of several prestigious liberal arts colleges have been downgraded or assigned a negative outlook by Moody’s Investors Service.

These are institutions — Haverford College, Morehouse College, Oberlin College and Wellesley College – that top students seek out, yet they are showing small but noticeable signs of fiscal stress several years after the end of the recession. Their downgraded ratings are still better than those of plenty of other institutions, and Moody’s has issued plenty of gloomy projects about  colleges during the economic downturn. But the recent actions are notable because they affect colleges that are by many measures — money, prestige, history — among the most fortunate in the country.

“We do see pressure on small private colleges as a group and that’s primarily because they don’t have a lot of different things they can do, so they are primarily dependent on tuition revenue,” said a Moody’s analyst, Edie Behr.

Moody’s advises institutions to try to diversify their revenue streams.

That is not an easy task, said Oberlin’s vice president for finance, Ronald Watts.

“It’s like a car dealership being sales-of-car dependent,” Watts said. “I mean, it’s our industry, what do you want us to do?”

There are three basic sources of revenue for these colleges: tuition, donations and money from endowment growth, though Oberlin is thinking about trying to use its campus for more summer programs of some kind.

…Haverford and Oberlin officials are both unsure how much the changes will actually affect them. Lower ratings — but not changes to an outlook — can drive up the costs of borrowing. But neither institution plans to incur new debt in the near term.

Oberlin, in Ohio, got knocked by the ratings agency on Aug. 5 for faring poorly since the recession compared to some of its peers. The college received a high-quality Aa2 grade but had its outlook changed to negative. Moody’s said the institution, which borrowed $15 million in August and may borrow another $17 this year, is increasingly leveraged and investing cash in capital projects.

Watts said the college grew its endowment by about $45 million in the 2013 budget year and is working to cut spending. But Watts said the endowment, which he said ranges from $500 to $700 million, is smaller than the endowments of other colleges in Oberlin’s peer group.