College credit downgrades outnumber upgrades according to Moody’s
Another higher ed bubble brewing?
Nick Anderson of The Washington Post reports:
In Moody’s U.S. college credit ratings, downgrades far outnumber upgrades
Howard University’s credit rating from Moody’s Investors Service fell this month for the second time in the past year, largely on concerns about money woes at its hospital.
But the historically black university in Northwest Washington has plenty of company: The rating agency has downgraded three dozen other four-year colleges and universities since July 2013, a sign of continuing financial fragility in higher education.
By contrast, nine of about 500 higher-ed institutions that Moody’s analyzes were given credit rating upgrades in the past year.
The Moody’s rating scale, from Aaa to C, is just one way of looking at the market. There are a plethora of college analysts, from Standard & Poor’s (which also rates college credit) to U.S. News and World Report (which provides rankings that are considered a measure of prestige). Even the federal government is planning to rate colleges on value and access, an initiative that has prompted much debate in the higher-ed world.
The Moody’s analysts — who are seeking to size up the risk of failure to meet contractual financial obligations and of estimated financial loss in the event of default — look at bottom-line metrics that matter to college leaders.
In Moody’s U.S. college credit ratings, downgrades far outnumber upgrades (The Washington Post)