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U.S. Higher Education Rating Actions, Third-Quarter 2021


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U.S. Higher Education Rating Actions, Third-Quarter 2021

S&P Global Ratings maintained 43 ratings and took 29 rating actions in the U.S. not-for-profit higher education sector in the third quarter of 2021. The 29 rating actions are broken out as follows:


Of the 18 outlooks revised to stable, 15 had been moved to negative in April 2020 as part of S&P Global Ratings' response to the heightened social and economic risks associated with the COVID-19 pandemic. In addition, during the third quarter of 2021, we raised our rating on Eastern University to 'BB+' from 'BB' due to significant improvements in the university's enrollment and operations. The outlook is stable.

Our sector view for the remainder of the 2021 calendar year remains negative, and 25% of the colleges and universities we rate have negative outlooks. In "Outlook For Global Not-For-Profit Higher Education: Empty Chairs At Empty Tables," published Jan. 20, 2021, on RatingsDirect, we discussed our view that disparities between higher- and lower-rated issuers would continue to increase and, through the first three quarters of 2021, we have seen that trend materialize. Of the 13 downgrades year to date, one was within the 'BB' rating category and nine were within or moved into the 'BBB' rating category, while only one was within the 'AA' rating category. For all of these institutions, the ongoing pandemic exacerbated preexisting enrollment challenges. However, some lower-rated colleges and universities have demonstrated signs of stabilization. Eastern University and Governors State University, for example, both saw upgrades in the third quarter of this year while half of the outlook revisions to stable were within the 'BBB' or 'BB' rating category. In addition, two of the five outlook revisions to positive were within the 'BBB' rating category. These colleges and universities, in addition to others that have seen positive rating revisions, have demonstrated operating flexibility during the pandemic by effectively implementing expense reductions and managing operating budgets.

In May 2021, we published "’Back To School' Will Take On New Meaning This Fall," which analyzed fall 2020 enrollment and demand data from the 439 four-year colleges and universities rated by S&P Global Ratings. In this report, we analyzed enrollment data across the issuers we rate and noted that enrollments declined last fall at two-thirds of the schools. Our fiscal 2020 public and private median reports (which included the initial impacts of COVID-19 on financial results) showed year-over-year declines in auxiliary revenue dependence due to room and board refunds distributed by colleges and universities in spring 2020. Looking forward, we expect auxiliary revenues and, in turn, auxiliary revenue dependence will remain historically low in our 2021 median reports due to limited on-campus student presence in fall 2020 and spring 2021.

For fall 2021, application data, selectivity rates, and matriculation rates could be skewed but, by fall 2022, we expect enrollment and demand metrics will normalize. Although final census enrollment data for fall 2021 are not yet available for many of the colleges and universities we rate, the majority have reported in-person curriculums and stabilizing enrollments.

The following tables summarize S&P Global Ratings' quarterly rating actions for U.S. not-for-profit higher education issuers. All rating actions, outlooks, and maintained ratings are based on our "Methodology: Not-For-Profit Public and Private Colleges and Universities" criteria, published Jan. 6, 2016.

Table 1

Third-Quarter U.S. Higher Education Rating Actions
Institution State Rating to Rating from Outlook to Outlook from Description
Eastern University PA BB+ BB Stable Negative Significant enrollment growth; improved and positive operating performance in fiscal 2020 and projected for fiscal 2021
Governors State University IL BBB- BB+ Stable Stable Positive operating results in recent years; strengthening balance sheet, which provides some cushion
Marshall B. Ketchum University CA A- Stable New rating
Washington College MD BBB Stable New rating

Table 2

Third-Quarter 2021 U.S. Higher Education Outlook Revisions
Institution State Rating Outlook to Outlook from Description
Alvernia University PA BB+ Stable Negative Solid operations in fiscal 2020 and projected in fiscal 2021; additional balance sheet growth lends stability
Chatham University PA BBB- Stable Negative Expectation for improved matriculation; maintenance of demand metrics; stable financial profile including sustained available resources
Dartmouth College NH AA+ Positive Stable Exceptional enterprise profile; positive operating margins over past few years; improved balance sheet; strong fundraising
Dickinson College PA A+ Negative Stable Significant decline in enrollment over past two years, some of which was planned
Florida Institute of Technology FL BBB- Stable Negative Relatively stable enrollment; solid operating surplus; available resource metrics remain sufficient
Icahn School of Medicine at Mount Sinai NY A- Stable Negative Solid enterprise profile; expectations for improved operations in fiscal 2021; steady balance sheet metrics
Johnson & Wales University RI A- Positive Negative Successful sale of Miami and Denver campuses and corresponding defeasance leading to lower annual debt burden
Longwood University VA BBB+ Stable Negative Stronger-than-expected enrollment in fall 2020; improved operations with further improvements in fiscal 2021; rising state appropriations
Medaille College NY BB Stable Negative Breakeven to positive operations in fiscal 2021 and fiscal 2022; stable available resources
Meredith College NC BBB+ Stable Negative Stable enrollment; federal stimulus partially offsetting pressured operating performance; expected increase in available resources in fiscal 2021
Messiah University PA A- Stable Negative Demand profile remains solid; available resources remain sufficient; de-risking of debt profile through recent refunding
Nebraska State College NE A Stable Negative Stable enrollment; federal stimulus supporting operating performance; continued operating and capital support from the state
Northern Arizona University AZ A+ Stable Negative Operating surpluses projected for next two years; growing state appropriations over past three years; improved liquidity
Oklahoma City University OK BBB- Stable Negative Available resources remain sufficient with potential for improvement; federal stimulus supporting operating performance
Pacific University OR BBB Stable Negative Consistently positive operating performance; sustained, although modest, available resources
Seattle Pacific University WA A- Negative Stable Enrollment pressure, including 5% decline in fall 2021; deficit operations in fiscal 2021 and 2022; ongoing litigation
Southeast Missouri State University MO A Stable Negative Solid demand metrics; history of near breakeven operations with surplus expected in fiscal 2021; sufficient balance sheet
University of Louisana at Lafayette LA A- Stable Negative Improved demand profile and enrollment growth; improved, although negative, operations; solid fundraising; low MADS burden
University of Montevallo AL A- Stable Negative Enrollment growth over past three years; significant improvement in operations with breakeven expected for fiscal 2021
University of Oklahoma OK A+ Stable Negative Resolution of litigation with Provident Oklahoma Education Resources Inc. resulting in no detrimental impacts to the university
University of Oregon OR AA- Stable Negative Stable operations with improvement expected in fiscal 2021; projected growth in available resources; increased state support
University of the Sacred Heart PR BB Stable Negative Significant federal funding, which will support improved operating performance
Vanderbilt University TN AA+ Positive Stable Exceptional operating performance; endowment growth; continued improvement in selectivity and matriculation
Winston-Salem State University NC BBB+ Positive Negative Transformational $30 million gift received by WSSU; stable enrollment; significant federal stimulus supporting operations
Winston-Salem State University* NC BBB Positive Negative Transformational $30 million gift received by WSSU; stable enrollment; significant federal stimulus supporting operations
*Auxiliary housing system rating

Table 3

Third-Quarter 2021 U.S. Higher Education Maintained Ratings
Institution State Rating Outlook
Albany College of Pharmacy and Health Sciences NY BBB+ Stable
Belmont University TN A+ Stable
Bethany College WV B- Negative
Bismarck State College ND A Stable
Boston University MA AA- Stable
Bowling Green State University OH A+ Stable
Bradley University IL BBB+ Stable
California Institute of Technology CA AA- Stable
Carnegie Mellon University PA AA Stable
Colorado State University CO A+ Stable
Davidson College NC AA+ Stable
Emory University GA AA Negative
Fayetteville State University NC BBB+ Stable
Fayetteville State University* NC BBB Stable
Illinois Wesleyan University IL A- Stable
Kenyon College OH A Stable
Lindsey Wilson College KY BBB- Stable
Massachusetts Institute of Technology MA AAA Stable
Mayville State University ND BBB+ Negative
Minot State University ND A Negative
Montana State University MT A+ Stable
Nevada System of Higher Education NV AA- Negative
Niagara University NY BBB+ Stable
North Dakota State College of Science ND A- Stable
Oberlin College OH AA- Stable
Ohio State University OH AA Stable
Rice University TX AAA Stable
Rosalind Franklin University of Medicine & Science IL BBB+ Stable
Saint Joseph's University PA A- Stable
Saint Mary's College IN A- Stable
St. Michael's College VT BBB Negative
Temple University PA A+ Stable
Texas Tech University System TX AA+ Stable
University of Alabama AL AA Stable
University of Dubuque IA BBB Stable
University of Idaho ID A Stable
University of Maine System ME AA- Stable
University of Minnesota MN AA Stable
University of St. Thomas TX BBB+ Negative
University of the South (Sewanee) TN A+ Stable
Vassar College NY A+ Stable
Wesleyan University CT AA Stable
Westminster College PA BBB Stable
*Auxiliary housing system rating

Julio Ramos contributed research to this report.

Related Research

This report does not constitute a rating action.

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