articles Ratings /ratings/en/research/articles/230712-u-s-not-for-profit-public-college-and-university-fiscal-2022-medians-and-ratios-road-to-recovery-is-paved-wi-12787817 content esgSubNav
In This List

U.S. Not-For-Profit Public College And University Fiscal 2022 Medians And Ratios: Road To Recovery Is Paved With Federal Funding; Hazards Remain


Table Of Contents: S&P Global Ratings Credit Rating Models


U.S. Local Governments And School Districts Still Benefit From Stimulus As The Clock Ticks Down


Criteria | Governments | U.S. Public Finance: Advance Notice Of Proposed Criteria Change: Methodology For Rating U.S. Governments


Sustainability Insights: North American Wildfire Risks Could Spark Rating Pressure For Governments And Power Utilities, Absent Planning And Preparation

U.S. Not-For-Profit Public College And University Fiscal 2022 Medians And Ratios: Road To Recovery Is Paved With Federal Funding; Hazards Remain

(Editor's Note: This article, originally published July 12, 2023, is being republished to provide the link to the medians interactive dashboard. )


Full details of the medians are available through our interactive dashboard, by clicking here: The below image is a preview.


For many U.S. public higher education institutions, fiscal 2022 represented the first few miles on a long road to recovery from the pandemic. After remote, hybrid, or socially distanced instruction through much of fiscal 2021, many institutions returned to full on-campus operations for fiscal 2022, which brought life back to campuses in addition to important revenue streams, particularly auxiliary revenues. Federal relief funding--direct and indirect through state pass throughs--enabled institutions to maintain stable footing and prepare for the future. While these funds and prudent expense management helped public colleges and universities recognize positive operations in fiscal 2022, on average, fiscal 2023 has been bumpier due to rising expenses, with many hazards remaining.

The advent of comprehensive, engaging remote learning enabled institutions across the country to navigate the worst of the pandemic, but it also strengthened yet another competitive force in the higher education landscape. Furthermore, the increasing competition for students and growing demands for on-campus amenities and services are forcing many institutions to enhance offerings and undertake costly capital projects, raising expenses that often require state support or bond financing. S&P Global Ratings believes highly rated institutions particularly flagship, public research universities that were previously insulated from these competitive pressures because of strong operating surpluses, large endowments, and generally strong fundraising capabilities, have ample ability to address deferred maintenance needs and evolving student demands. Despite increased state support, we believe that other more regional and less-selective schools will require further programmatic innovation and expense-side belt-tightening to remain financially successful.

Rating Distribution And Characteristics

Chart 1


We maintained 141 ratings on U.S. public colleges and universities as of June 1, 2023. While these ratings ranged from 'AAA' to 'CC', more than 80% of institutions are rated in the 'A' or 'AA' category, with the 'AAA', 'BBB', and speculative grade categories consisting of only seven, 16, and three schools, respectively. Therefore, changes in median metrics for these categories might represent the variability associated with a small sample size, rather than wholesale differences in credit quality. Since our last medians report, published July 15, 2022, on RatingsDirect, we assigned ratings to one new public educational institution, Florida Polytechnical Institute. During this same period, we raised the ratings on four public universities, two of which are in Illinois, and which stemmed from, among other factors, the state's improving fiscal situation and the expectation for stable state support over the near term'. See "Various Rating Actions Taken On Illinois Public Universities Following State Upgrade," published May 6, 2022, on RatingsDirect. We also lowered the rating twice on one institution, once in August 2022 and again in February 2023. Subsequent to June 1, 2023, we upgraded Eastern Illinois University to 'BBB-' from 'BB+'. Since our last medians report, one rating was withdrawn and three institutions were reclassified internally and therefore they are no longer captured in this report. In addition, Vermont State Colleges redeemed its series 2013 bonds, the only series we rated, effective July 1, 2023. We no longer maintain a rating. Since our last medians report, one rating was withdrawn and four institutions were reclassified internally and therefore they are no longer captured in this report.

All data and ratings included in this report are as of June 1, 2023. We excluded the financial data for one institution that had not yet published a fiscal 2022 audit as of this date. For some institutions that were awaiting their state's finalization of the audit process, we used draft audit information. In general, public universities follow standards issued by the Governmental Accounting Standards Board (GASB). However, four public institutions report financials according to the Financial Accounting Standards Board (FASB). For comparability, we excluded the financial ratios of public institutions using FASB reporting but included enterprise profile data for these schools.

Although we rate other types of debt for public colleges and universities, such as housing or other auxiliary secured debt, the data in this report reflect the underlying credit characteristics of publicly rated universities, colleges, or systems. In addition, while we rate many community colleges and community college systems, we included only our ratings on four-year institutions or systems that primarily constitute four-year programs to maintain data consistency and enable a meaningful comparison between similar entities.

We publish these medians as general benchmarks to observe broader industry trends. The credit analysis for any institution involves an assessment of qualitative factors that are beyond the scope of this article. Therefore, these medians should not be considered thresholds to achieve a particular rating.

Table 1

Public colleges and universities -- sectorwide fiscal 2022 ratios
2018 2019 2020 2021 2022
Sample size 149 145 143 145 141
Total FTE enrollment
Median 19,541 19,426 18,773 18,650 18,397
Mean 35,268 35,929 36,248 35,484 36,152
FTE enrollment change (%)
Median -1.0 -0.6 -0.5 -1.5 -1.9
Mean 1.5 1.9 -0.7 -2.1 -1.9
Undergraduates as a % of total enrollment
Median 81.2 81.5 80.6 82.7 82.0
Mean 81.0 81.6 80.8 82.2 81.9
First-year acceptance rate (%)
Median 71.8 72.7 71.8 75.1 77.8
Mean 69.9 70.4 70.3 72.9 75.7
First-year matriculation rate (%)
Median 32.3 30.4 28.9 25.8 25.7
Mean 34.8 32.6 31.1 29.1 27.6
Average SAT scores
Median 1,147 1,162 1,171 1,152 1,188
Mean 1,152 1,172 1,173 1,157 1,183
Average ACT scores
Median 23 24 24 24 24
Mean 24 24 24 24 25
Retention rate (%)
Median 80.6 80.3 80.0 82.0 80.2
Mean 80.0 80.3 80.7 81.3 79.9
Six-year graduation rate (%)
Median 56.3 59.0 62.0 61.6 62.4
Mean 58.3 60.7 62.4 62.1 62.8
In-state students (%)
Median 79.0 79.6 79.7 77.0 77.5
Mean 76.5 76.5 76.2 75.8 75.6
Net adjusted operating income (%)
Median 0.5 0.4 0.5 3.7 2.9
Mean 0.6 0.5 0.1 4.3 2.9
State appropriations to revenue (%)
Median 21.5 21.1 20.9 21.4 20.7
Mean 23.0 22.1 22.2 21.8 21.9
Student-generated revenue (%)
Median 47.6 47.3 46.4 41.9 42.3
Mean 45.1 45.4 44.4 40.1 40.7
Auxiliary revenue (%)
Median 9.8 10.0 8.4 6.6 8.5
Mean 10.1 10.1 8.7 6.9 8.7
Grants and contracts to revenue (%)
Median 9.7 10.1 10.5 10.8 11.3
Mean 11.1 11.4 12.1 12.0 12.3
Gifts and pledges to revenue (%)
Median 1.6 2.0 1.8 2.1 2.5
Mean 2.1 2.2 2.2 2.4 3.1
Investment and endowment income to revenue (%)
Median 1.0 1.1 1.0 1.2 0.4
Mean 1.8 1.6 1.5 3.4 0.2
Financial aid burden as a % of expenses
Median 9.0 9.3 9.3 9.7 9.1
Mean 9.5 9.7 9.7 10.1 9.6
Instruction expense as a % of expenses
Median 26.9 26.7 26.2 25.4 23.1
Mean 27.8 27.6 27.5 27.3 24.8
Tuition discount rate (%)
Median 24.8 26.2 26.6 27.6 29.0
Mean 25.7 27.5 27.6 28.6 29.7
University endowment market value ($000s)
Median 280,997 256,077 243,637 310,900 298,414
Mean 1,279,107 1,207,481 1,249,529 1,660,882 1,475,863
Foundation endowment market value ($000s)
Median 224,648 235,008 236,901 305,963 308,817
Mean 728,267 676,698 786,355 1,011,420 1,065,497
Cash and investments to operations (%)
Median 48.7 49.1 46.9 55.8 52.2
Mean 60.1 59.0 60.2 70.1 67.3
Cash and investments to debt (%)
Median 117.0 109.4 121.2 139.5 142.4
Mean 157.1 146.1 158.4 183.2 178.3
Total debt outstanding ($000s)
Median 322,940 315,113 342,018 356,473 355,794
Mean 869,479 924,263 984,463 1,003,116 1,129,210
Average age of plant (years)
Median 14.0 14.2 14.8 15.3 15.1
Mean 14.5 14.8 15.3 15.7 15.4
MADS burden (%)
Median 4.2 4.1 4.0 3.9 3.8
Mean 4.6 4.4 4.2 4.4 4.1
Total debt per FTE enrollment ($)*
Median 16,167 17,216 17,505 18,183 19,554
Mean 20,544 22,174 22,414 22,999 26,398
State appropriations per FTE enrollment ($)
Median 7,704 7,929 8,189 8,487 9,350
Mean 8,734 8,727 8,894 9,663 10,403
Endowment per FTE enrollment ($)
Median 21,899 25,187 27,978 32,986 33,298
Mean 36,637 40,658 42,626 55,392 53,779
FTE-- Full-time-equivalent. MADS--Maximum annual debt service. *Foundation debt included in fiscal 2022.

Table 2

Public colleges and universities -- fiscal 2022 ratios by rating category
AAA AA A BBB SG Sectorwide
Sample size 7 52 63 16 3 141
Total FTE enrollment
Median 60,438 41,783 12,990 4,436 6,637 18,397
Mean 80,805 66,345 14,983 5,214 18,140 36,152
FTE enrollment change (%)
Median 1.9 0.0 -3.1 -3.2 -7.9 -1.9
Mean 1.4 -0.1 -3.1 -3.4 -5.5 -1.9
Undergraduates as a % of total enrollment
Median 76.2 80.2 84.7 90.7 75.3 82.0
Mean 74.7 78.2 84.3 88.7 75.5 81.9
First-year acceptance rate (%)
Median 65.5 73.2 81.5 78.9 72.2 77.8
Mean 49.9 72.2 80.7 79.7 72.6 75.7
First-year matriculation rate (%)
Median 33.7 27.0 23.8 25.7 15.2 25.7
Mean 35.4 27.5 25.3 31.5 36.1 27.6
Average SAT scores
Median 1,347 1,239 1,102 941 956 1,188
Mean 1,337 1,248 1,133 1,071 998 1,183
Average ACT scores
Median 29.4 25.9 23.0 20.3 - 24.0
Mean 29.8 26.4 23.6 21.5 20.4 24.7
Retention rate (%)
Median 94.6 86.8 76.0 64.5 73.0 80.2
Mean 92.5 85.8 77.8 65.2 70.3 79.9
Six-year graduation rate (%)
Median 89.9 71.0 57.4 46.0 44.0 62.4
Mean 86.0 71.9 58.7 43.6 38.8 62.8
In-state students (%)
Median 68.0 74.3 81.4 82.5 92.0 77.5
Mean 67.9 71.8 77.9 78.9 92.4 75.6
Adjusted operating revenue ($000s)
Median 4,572,843 2,148,374 489,805 127,072 229,987 841,285
Mean 9,396,702 4,583,697 660,984 222,111 626,232 2,474,775
Adjusted operating expense ($000s)
Median 4,556,402 2,030,534 486,926 128,954 223,187 793,599
Mean 8,794,389 4,402,865 648,379 218,111 628,736 2,372,489
Net adjusted operating income (%)
Median 7.6 3.2 2.5 -0.6 -0.3 2.9
Mean 7.5 3.9 2.2 1.5 -0.7 2.9
State appropriations to revenue (%)
Median 12.2 17.3 20.7 29.1 39.2 20.7
Mean 10.2 18.9 22.4 31.4 39.7 21.9
Student-generated revenue (%)
Median 23.2 37.0 47.7 35.7 33.4 42.3
Mean 28.3 37.1 46.5 37.1 29.2 40.7
Auxiliary revenue (%)
Median 3.8 7.9 9.5 8.0 0.9 8.5
Mean 5.3 8.9 9.1 8.8 3.9 8.7
Grants and contracts to revenue (%)
Median 13.5 13.4 8.6 5.7 6.3 11.3
Mean 14.4 14.8 11.8 6.5 7.4 12.3
Gifts and pledges to revenue (%)
Median 4.0 2.7 1.4 0.7 0.5 2.5
Mean 5.6 3.4 2.6 2.3 1.1 3.1
Investment and endowment income to revenue (%)
Median 2.0 0.5 0.2 0.1 0.1 0.4
Mean 2.1 0.6 -0.2 0.1 -0.1 0.2
Financial aid burden as a % of expenses
Median 4.3 8.0 10.2 9.5 11.6 9.1
Mean 5.0 8.4 10.6 11.0 12.6 9.6
Instruction expense as a % of expenses
Median 20.1 22.6 23.5 25.2 33.8 23.1
Mean 19.5 23.0 25.0 30.6 31.5 24.8
Tuition discount rate (%)
Median 23.6 28.2 26.4 33.1 56.2 29.0
Mean 22.2 29.1 28.2 37.2 52.6 29.7
University endowment market value ($000s)
Median 5,036,526 1,102,535 164,766 21,049 14,332 298,414
Mean 12,355,176 1,846,347 293,923 30,046 102,631 1,475,863
Foundation endowment market value ($000s)
Median 1,483,771 945,352 178,684 9,858 20,096 308,817
Mean 5,187,508 1,818,592 292,030 73,708 55,324 1,065,497
Cash and investments ($000s)
Median 7,502,647 1,345,447 257,181 42,672 84,001 469,613
Mean 18,798,712 3,126,257 355,719 67,588 246,084 2,341,075
Cash and investments including foundation ($000s)
Median 8,517,250 2,837,567 457,156 64,348 177,083 794,312
Mean 21,936,471 4,752,353 657,706 121,922 289,704 3,161,002
Cash and investments to operations (%)
Median 152.1 57.2 51.8 34.2 40.4 52.2
Mean 163.7 77.3 57.3 36.7 36.9 67.3
Cash and investments to debt (%)
Median 383.2 182.0 117.7 88.0 103.2 142.4
Mean 392.6 216.2 144.2 106.5 125.0 178.3
Cash and investments including foundation to operations (%)
Median 209.5 115.3 96.5 56.3 50.4 95.6
Mean 240.4 124.7 103.7 58.0 56.7 112.3
Cash and investments including foundation to debt (%)
Median 477.6 278.4 208.7 130.4 174.8 231.3
Mean 525.5 311.6 232.4 174.3 187.6 268.7
Total debt outstanding ($000s)
Median 3,290,934 931,471 231,363 48,283 81,435 355,794
Mean 3,917,054 2,096,986 350,268 79,882 162,014 1,129,210
Total debt outstanding including foundation ($000s)
Median 3,550,331 1,142,825 241,762 50,373 81,435 376,200
Mean 4,001,341 2,213,268 361,477 79,920 162,014 1,180,558
Average age of plant (years)
Median 13.7 13.5 15.9 17.7 22.3 15.1
Mean 14.5 13.7 15.9 18.2 22.6 15.4
MADS burden (%)
Median 3.5 3.4 4.0 3.6 3.3 3.8
Mean 3.8 3.8 4.7 3.4 3.0 4.1
Total debt per FTE enrollment ($)*
Median 45,451 26,728 18,273 11,945 10,232 19,554
Mean 57,082 30,862 22,416 16,759 12,377 26,398
State appropriations per FTE enrollment ($)
Median 8,685 10,198 7,685 9,465 17,591 9,350
Mean 10,724 10,973 9,116 12,302 16,599 10,403
Endowment per FTE enrollment ($)
Median 221,305 43,045 29,149 7,435 8,103 33,298
Mean 208,509 66,407 36,031 14,573 9,627 53,779
FTE--Full-time-equivalent. MADS--Maximum annual debt service. SG-- Speculative-grade. *Foundation debt included in fiscal 2022.

Enrollment And Demand Medians

Ongoing enrollment declines continue across the sector

Fall 2021 saw the fifth consecutive year of median declines in FTE enrollment for public colleges and universities. Prior to the pandemic, many institutions were already facing demographic pressures, with a declining number of students graduating from high school each year in many parts of the U.S. The pandemic intensified this pressure, with more students electing to delay or otherwise forgo a traditional four-year education due to increased health and safety risks and a lack of a traditional on-campus experience. While many institutions returned to campus for instruction for fall 2021, enrollment challenges persisted as for-profit institutions, two-year degree programs, entering the workforce, and other alternatives became increasingly attractive for students questioning the true value of a traditional four-year degree. The median enrollment decline of 1.9% is greater than any recorded in the past five years, although the average decline of 1.9% reflects a slight improvement year over year.

Chart 2


Despite the pandemic, highly rated schools remained insulated from enrollment declines in fall 2021, with the 'AAA' rating category posting a solid 1.9% increase and the 'AA' rating category remaining flat. Despite modest FTE enrollment declines at three institutions, all seven within the 'AAA' rating category median saw year-over-year growth in first-year class size. The 'A' rating category, which comprises nearly 45% of all ratings, recorded a median 3.1% decline in FTE enrollment while greater losses of 3.2% and 7.9% were felt at the 'BBB' and speculative-grade categories, respectively. Across these categories, eight of 19 institutions saw FTE enrollment slip more than 5%, with only five seeing year-over-year increases.

Chart 3


Enrollment outcomes continued to vary by state in fall 2021 and were generally reflective of the migratory trends recorded across the U.S. in recent years. Public colleges and universities in Utah and Texas saw FTE enrollment rise 4.7% and 4.5%, respectively, while institutions in the Carolinas and the Northern Rockies also recorded healthy enrollment trends. Institutions in Alaska, Indiana, Missouri, and New York experienced the largest average enrollment declines.

Competition is becoming more apparent in demand metrics

Chart 4


In fall 2021, while some demand metrics remained stable year over year, others reflected an increasingly competitive market. In fall 2020, we noted that, due to the uncertainty of demand stemming from the pandemic, many public colleges and universities appeared to have relaxed selectivity to matriculate a stable first-year class. One year later, that strategy still seems to be in place as the median first-year acceptance rate rose to 77.8% in fall 2021 from 75.1% in fall 2020. This increase, however, was not uniform across all rating categories as the highest-rated institutions in the 'AAA' category lowered selectivity very slightly to a median 65.5% from 65.8% in fall 2020. Similarly, partially due to some rating movement within the category, the 'BBB' category saw first-year acceptance tighten modestly.

In our view, the increasing acceptance and use of the Common Application across the sector as well as the adoption of test-optional application processes at many institutions have made applying to college easier than ever. As such, while the absolute number of applications and growth in applications are certainly important metrics, the rate at which an institution converts that application into a first-year student is an increasingly important metric. With growing ease-of-application and rising competition, median first-year matriculation rates have steadily slid in recent years. Between fall 2017 and fall 2020, median first-year matriculation for public colleges and universities fell to 25.8% from 32.3%, with the metric falling three percentage points in fall 2020. Unlike many other metrics, median first-year matriculation fell across all rating categories, reflective of the competition with other public institutions as well as with private and for-profit institutions.

Although public colleges and universities are finding it harder to matriculate students, they are retaining and graduating them at a steady rate. Year-over-year changes to median retention are somewhat mixed across rating categories, although across public colleges and universities, the median retention rate of 80.2% reflects a nearly two-percentage-point decline from fall 2020, a rate that is largely in line with pre-pandemic levels. We note that the median graduation rate in fiscal 2022, which is a measure of completions in spring 2021, improved across the sector and improved across each individual rating category. In our view, this reflects a larger trend to enhance access to guidance, counseling, and coaching in an effort to improve student outcomes.

In response to the pandemic, many schools adopted a test-optional application process for fall 2020, which was largely extended to fall 2021 or made permanent by management. As a result, only 80% of institutions submitted average SAT scores, and only 85% submitted average ACT scores in response to our questionnaires. While this did not materially affect our median or average test scores, we believe test-optional applications could yield self-selectivity bias in test score reporting in the future. Given the recent ruling on affirmative action, we expect that colleges and universities will increase targeted recruitment and expand financial aid programs, while a broader move to test optionality is expected across the industry.

Financial Medians

Operating performance showed strength

While demographic challenges, pandemic uncertainty, and rising competition affected enrollment and student-demand metrics for all public colleges and universities, financial operations generally remained strong through fiscal 2022, with a median operating surplus of 2.9%, down from a historic high of 3.7% in fiscal 2021. While higher-rated institutions fared better than their lower-rated peers, institutions in the 'BBB' and speculative grade rating categories fared reasonably well, recording median operating deficits of 0.6% and 0.3%, respectively, with only four institutions recording deficits greater than 3.0%. This relative operating success is partially attributed to the recognition of federal relief funds, expense reductions, and rebounding auxiliary revenues. For fiscal 2023, we expect median operating margins across all rating categories will tighten as institutions exhaust their federal relief funding and inflationary and labor market pressures increase expenses.

Chart 5


As public colleges and universities returned to campus in fall 2021, auxiliary revenues (housing, dining, event, athletics, etc.) began to rebound. As a percent of total adjusted operating revenue, median auxiliary revenue jumped to 8.5% in fiscal 2022 from 6.6% recorded fiscal 2021. While still below pre-pandemic levels of over 10%, the increase reflects the start of a recovery. We understand this recovery continued into fiscal 2023 but have heard that some institutions that draw a high percentage of students from local areas are finding it difficult to refill residence halls. Operations were further buoyed by the remaining pandemic-relief funding from the Higher Education Emergency Relief Fund. As states saw tourism and tax inflows return, some schools received additional relief funding from state governments, while others applied for and received Federal Emergency Management Agency relief and other grants. See "Federal Funds Kept U.S. Colleges And Universities Afloat; Some May Sink When They're Gone," published June 2, 2022. This increased auxiliary, federal relief, and grant revenue offset rising expenses in fiscal 2022, stemming from both a return to full on-campus operations and macroeconomic pressures. During fiscal 2022, many institutions saw utility and supply costs escalate due to inflation and also found a competitive labor market requiring increases in compensation. Somewhat offsetting these increases, labor market challenges are also making hiring for vacant roles difficult which has kept compensation and benefit expense lower than it otherwise might be.

We note that public colleges and universities vary in their audit presentation of operations. S&P Global Ratings adjusts operations to normalize or reduce variability from one-time revenues and expenses. We also adjust for noncash items, including investment-related gains and losses and pension and other postemployment benefits (OPEB)-related expenses, particularly considering GASB Statements Nos. 68 and 75. Institutions varied in their presentation of emergency relief funding, often including these funds under nonoperating revenue. We include emergency relief funds in our calculation of adjusted operating revenue, typically under other revenues, as these resources were distributed across the sector, helped replace reduced auxiliary revenues, and funded operating expenses incurred as a result of the pandemic.

Chart 6


Student-generated revenue rebounds for some

After falling to a five-year low of 41.9% in fiscal 2021, median student-generated revenue dependence rose slightly to 42.3% in fiscal 2022, driven largely by the rebound in auxiliary revenue. While auxiliary revenue, which bounced back nicely in fiscal 2022, constitutes part of total student-generated revenue, net tuition revenue, which is the larger of the two pieces, has been slower to recover due to sectorwide enrollment challenges and rising tuition discounting. To date, the 'AAA' and 'AA' rating categories, which saw median FTE enrollment growth and stability in fall 2021, each recorded year-over-year increases in median student-generated revenue. The 'A' and 'BBB' rating categories both reported declines in FTE enrollment and in median student-generated revenues. Finally, as federal relief funds are expended through fiscal years 2023 and 2024, we expect FTE enrollment will slowly strengthen toward pre-pandemic levels.

Chart 7


Chart 8


State appropriations continued to increase

For all institutions at the height of the pandemic, federal relief helped support unexpected expense increases and, in many cases, more than offset lost auxiliary or other revenue. In fiscal 2022, median state appropriation dependence declined slightly to 20.7%, but generally remained in line with historical medians. While a year-over-year decline might come as a surprise given increased support from many states, we note that auxiliary revenue has recovered almost as quickly as it fell. Furthermore, many institutions classified federal relief funding as nonoperating revenue, while we include it in our calculation of adjusted operating revenue, but typically under other revenues. As remaining federal relief funds (which appear to be minimal, per our conversations with our rated universe) are exhausted in fiscal years 2023 and 2024, we expect state appropriation dependence will increase, particularly given that two-thirds of state budgets for fiscal 2023 reflect growth in higher education funding, many of which suggest double-digit increases.

While state appropriation dependence slipped in fiscal 2021, median state appropriations per FTE enrollment rose by 10.2%, continuing a seven-year trend of increases and nearly tripling the average increase recorded over the past three years. This marked increase is a product of a several factors including the passing through of federal relief funds by state legislatures and a general increase in state operating support for higher education, but also a steady decline in FTE enrollment at public colleges and universities. Over the next few years, we expect an increase in the absolute value of state operating appropriations across many states, but we also anticipate enrollment challenges will fuel further growth in this metric.

Table 3

Public colleges and universities -- median endowment market value by rating category ($000s)
2021 % change 2022
AAA 4,862,648 3.6 5,036,526
AA 1,204,034 -8.4 1,102,535
A 152,236 8.2 164,766
BBB 33,264 -36.7 21,049
Sectorwide 310,900 -4.0 298,414
Source: S&P Global Ratings.
Strong markets support foundations and endowments

After benefitting from an extremely strong market in fiscal 2021, foundations and endowments slipped in fiscal 2022, but market values largely remained higher than pre-pandemic levels. Across the sector, the median university endowment market value fell approximately 4% to $298.4 million from $310.9 million, after rising nearly 28% in fiscal 2021. The National Association of College and University Business Officers' TIAA Study of Endowments, which surveys and reports on nearly 700 colleges, universities, and education-related foundations, cited an average endowment return of negative 8.0% for fiscal 2022, with endowments of more than $1 billion returning, on average, negative 4.5%, and endowments of less than $25 million returning, on average, negative 11.5%. This figure captures our view of the bifurcated higher education sector. Higher-rated institutions often maintain large endowments, with sophisticated investment management teams, either internal or outsourced, and have greater investment latitude than lower-rated institutions with smaller endowments. Furthermore, many higher-rated institutions also maintain experienced, expansive advancement teams capable of connecting with tens of thousands of alumni and stakeholders daily. The Council for Advancement and Support of Education's fiscal 2022 Voluntary Support of Education survey indicates that voluntary support for all higher education institutions was up 12.5% compared with the previous fiscal year. Of note, while support increased year over year across two-thirds of the reporting institutions, the top 20 fundraisers in fiscal 2022 received about $15.7 billion--more than a quarter of the total raised by all institutions in fiscal 2022. Of those 20, nine are public institutions.

Chart 9


Financial resources growth continues despite market volatility

With the adoption of revised criteria for global not-for-profit education providers on April 24, 2023, our analysis of public colleges and universities no longer considers adjusted unrestricted net assets (UNA) as a measure of financial resource strength. While our revised criteria still consider cash and investments, they also account for the cash and investments of college- or university-related foundations when analyzing the strength of an institution's financial resources. Generally, our view of what constitutes a college- or university-related foundation remains unchanged between our calculation of adjusted UNA and our calculation of cash and investments including foundation. With the inclusion of foundation assets, absolute financial resource values and financial resource metrics are stronger, as Table 2 illustrates. Over the coming years, data gathering will enable us to analyze the inclusion of foundation assets over time. For now, we can only gather that, across the rating spectrum, college and university foundations maintain material cash and investments.

In fiscal 2021, robust market returns bolstered the cash and investments of public colleges and universities across the sector, elevating financial resource metrics after years of relative stability. In fiscal 2022, market volatility generally pared back some of those fiscal 2021 gains, although we observed that some highly skilled endowment and investment management teams preserved and even improved on fiscal 2021 growth. Most public colleges and universities saw investments contract year over year but experienced generally healthy operating results and strong fundraising that yielded positive growth in financial resources by the end of the year. However, growing expense pressures and a return for many to full on-campus instruction in fall 2021 led to a rapid rebound in operating expenses. Therefore, median cash and investments to operations softened year over year. In addition, with the sectorwide decline in total debt outstanding, cash and investments to debt also improved in fiscal 2022.

Chart 10


Debt metrics stabilized overall

Over the past two years, low interest rates and high investor demand motivated many public colleges and universities to refund older, relatively expensive debt and accelerate capital projects. As a result, median total debt outstanding rose 9% in fiscal 2020, and another 4% in fiscal 2021. In fiscal 2020, with interest rates at their lowest levels in many years, 'AAA' through 'BBB' rating categories saw marked increases in median total debt outstanding, with only speculative-grade institutions recording a decline. By fiscal 2021, many institutions that sought to enter the market had already done so, resulting in declines in median total debt outstanding across all rating categories aside from 'AAA'. In fiscal 2022, median total debt outstanding fell 0.2% to $355.8 million. However, higher-rated institutions in the 'AAA' and 'AA' categories saw debt continue to climb during the year, the result of some making last-minute issuances ahead of rate hikes, but also the result of a recent accounting change that immediately affected public colleges and universities. With the implementation of GASB Statement No. 87, Leases (GASB 87), effective for periods subsequent to June 15, 2021, many public colleges and universities, particularly comprehensive institutions or those in major metropolitan areas, saw a material increase in lease liabilities in fiscal 2022.This increased liability does not reflect new leases, but rather updated accounting for those leases.

Importantly, the accounting change also resulted in changes to maximum annual debt service (MADS) trends across the sector. For many years, median MADS as a percent of operating expense has been somewhat linear across the sector, with the 'AAA' rating category reporting the lowest percentage, and the 'BBB' rating category often recording the highest. However, with material debt issuances from high-rated institutions over recent years and GASB 87 disproportionately affecting these same institutions, the cross-rating-category dynamic for median MADS as a percent of operating expense has shifted for fiscal 2022. Finally, across the sector, total debt per FTE enrollment rose for the fifth consecutive year, reaching $19,554 in fiscal 2022. For higher-rated institutions, however, FTE enrollment increases in fall 2021 offset additional debt reported in fiscal 2022, leading to declines in the metric for the 'AAA' and 'AA' rating categories.

After slowly rising for more than five years, median average age of plant declined in fall 2022, fueled by modest improvements across 'AAA' and 'AA' rating categories. As discussed, the low-interest-rate environment led many public colleges and universities to accelerate capital projects, some of which might have already come to fruition in fiscal 2022. We expect institutions with outdated facilities could face difficulty marketing to a smaller pool of potential students, with an increased cost of financing renovations in the near term.

What We're Watching

Increasing competition

U.S. public colleges and universities are competing against each other, in addition to private, for-profit, two-year, vocational, online, and other institutions for fewer high school graduates. We anticipate public institutions will continue efforts to attract nontraditional, graduate, and international students to offset the lower number of expected traditional domestic high school graduates.

Pension and OPEB funding

While favorable investment returns bolstered the funding status of many state pension plans in fiscal 2021, these gains were largely pared back in fiscal 2022, with the funding of many plans approaching fiscal 2020 levels. Given this reversal, we expect actuarially required pension contributions at many institutions will rise over the near term, which could stress institutions with limited operating flexibility.

Operations after relief funding

As public colleges and universities exhaust remaining federal relief funds, we expect operating performance, which has been positive in recent years despite a very challenging environment, will face some pressure. As operating revenues shrunk at many institutions during the height of the pandemic, some financially prudent senior leadership teams sought out operating efficiencies, made expense reductions, and put themselves in a position to excel after all federal relief funds were recognized. Others, however, faced a difficult operating environment in fiscal 2023, particularly given rising competition, a tight labor market, and inflationary challenges persisting.

State support

We expect state support for higher education will generally remain solid over the near term as state legislatures deploy excess federal relief funds distributed throughout the pandemic. According to the State Higher Education Executive Officers Association's annual Grapevine survey, state support for higher education hit $112.3 billion in fiscal 2023, up 6.6% from the previous year and up 27.5% over the past five years. For fiscal 2023, 38 states reported year-over-year increases in combined state and federal stimulus funding, with 14 states increasing support by more than 10%. Importantly, however, 45 states recorded year-over-year increases in state support excluding federal stimulus, indicative of, perhaps, renewed prioritization of higher education by state lawmakers and the recognition that, in many states, public higher education funding is relatively lower than it was before the Great Recession. We note, the amount of federal relief funds remaining in state coffers and the states' plan to distribute those funds to public higher education institutions beyond the short term are factors that vary significantly state to state. Across the board, however, state fiscal 2023 results and fiscal 2024 budgets suggest that two consecutive years of budget surpluses have generally positioned states well for what S&P Global Economics suggests could be a shallow slowdown over the next year. See "Economic Outlook U.S. Q3 2023: A Sticky Slowdown Means Higher For Longer" published June 26, 2023.

Capital investments

Changes in total enrollment, shifts to virtual instruction, and remote work are causing institutions to revisit campus master plans. As the cost of debt has increased, colleges and universities might also alter plans for investments in high-demand programming, marketing, and campus improvements that attract students. In this environment, we expect higher-rated colleges and universities with deep pockets will continue to differentiate themselves and improve their demand profiles, as we continue to see bifurcation of credit quality within the sector.

Table 4

Public colleges and universities -- median debt by rating category ($000s)
2021 % change 2022
AAA 2,911,543 13.0 3,290,934
AA 862,015 8.1 931,471
A 233,330 -0.8 231,363
BBB 52,560 -8.1 48,283
Sectorwide 356,473 -0.2 355,794
Source: S&P Global Ratings.

Table 5

Public colleges and universities -- ratings by category
As of June 1, 2023
Institution State Outlook
Indiana University IN Stable
Purdue University IN Stable
Texas A&M University System TX Stable
University of Michigan MI Stable
University of North Carolina at Chapel Hill NC Stable
University of Texas System TX Stable
University of Virginia VA Stable
Florida State University FL Stable
Florida State University System FL Stable
Texas A&M at College Station TX Stable
Texas Tech University System TX Stable
University of Alabama Birmingham AL Stable
University of Delaware DE Stable
University of Florida FL Stable
University of Kentucky KY Stable
University of Missouri MO Stable
University of Pittsburgh PA Stable
University of Utah UT Stable
University of Washington WA Stable
University System of Maryland MD Stable
Arizona State University AZ Stable
Clemson University SC Positive
College of William & Mary VA Stable
Iowa State University of Science & Technology IA Stable
Michigan State University MI Stable
North Carolina State University at Raleigh NC Stable
Ohio State University OH Stable
Pennsylvania State University PA Stable
State University of Iowa IA Stable
University of Alabama AL Stable
University of California System CA Stable
University of Houston TX Stable
University of Minnesota MN Stable
University of Nebraska System NE Stable
University of South Florida FL Stable
Virginia Polytechnic Institute & State University VA Stable
Auburn University AL Stable
Ball State University IN Stable
California State University Trustees CA Stable
City University of New York NY Stable
East Carolina University NC Stable
Florida International University FL Stable
Minnesota State College & University MN Stable
Nevada System of Higher Education NV Stable
North Dakota State University ND Stable
Oklahoma State University OK Stable
State University of New York NY Stable
University of Alabama Huntsville AL Stable
University of Arizona AZ Stable
University of Central Florida FL Stable
University of Cincinnati OH Stable
University of Illinois IL Stable
University of Kansas KS Stable
University of Maine System ME Negative
University of Massachusetts MA Stable
University of New Mexico NM Stable
University of Oregon OR Stable
University of Wyoming WY Stable
Virginia Commonwealth University VA Stable
Boise State University ID Stable
Bowling Green State University OH Stable
Central Michigan University MI Stable
Cleveland State University OH Stable
Colorado School of Mines CO Stable
Colorado State University System CO Stable
Ferris State University MI Negative
Florida Atlantic University FL Stable
Grand Valley State University MI Stable
Kansas State University KS Stable
Kent State University OH Stable
Missouri State University MO Stable
Montana State University MT Positive
Morgan State University MD Stable
New Mexico Institute of Mining & Technology NM Stable
New Mexico State University NM Stable
Northern Arizona University AZ Stable
Ohio University OH Negative
Old Dominion University VA Stable
Rutgers University NJ Stable
Temple University PA Stable
Troy University AL Stable
University of Alaska AK Stable
University of Central Missouri MO Stable
University of Connecticut CT Stable
University of Louisville KY Stable
University of North Carolina at Charlotte NC Positive
University of North Carolina at Greensboro NC Stable
University of Oklahoma OK Stable
University of Rhode Island RI Stable
University of South Alabama AL Stable
University of Vermont & State Agricultural College VT Positive
University System of New Hampshire NH Stable
Washington State University WA Stable
Wayne State University MI Stable
Youngstown State University OH Negative
College of New Jersey NJ Stable
Metropolitan State University of Denver CO Stable
Minot State University ND Stable
Nebraska State College NE Stable
New Jersey Institute of Technology NJ Stable
Northern Michigan University MI Stable
Ramapo College NJ Stable
Rowan University NJ Stable
Saginaw Valley State University MI Stable
Southeast Missouri State University MO Stable
University of Idaho ID Stable
University of North Alabama AL Stable
University of North Florida FL Stable
University of Northern Iowa IA Stable
University of Southern Indiana IN Stable
University of Toledo OH Stable
West Virginia University WV Stable
Western Michigan University MI Stable
Worcester State University MA Stable
Eastern Kentucky University KY Stable
Illinois State University IL Positive
Kean University NJ Stable
University of Louisiana at Lafayette LA Stable
University of Montevallo AL Stable
University of Northern Colorado CO Negative
Western Kentucky University KY Stable
Winston-Salem State University NC Stable
Fayetteville State University NC Stable
Indiana University of Pennsylvania PA Stable
Lake Superior State University MI Stable
Mayville State University ND Stable
Southern Illinois University IL Stable
Valley City State University ND Stable
Vermont State College VT Negative
Governors State University IL Stable
Jacksonville State University AL Stable
Missouri Western State University MO Stable
Nicholls State University LA Stable
Alabama State University AL Stable
Delaware State University DE Stable
Florida Polytechnic University FL Stable
Missouri Southern State University MO Negative
Western Illinois University IL Stable
Eastern Illinois University IL Stable
Northeastern Illinois University IL Stable
University of Puerto Rico PR Negative

Table 6

Glossary of ratios and terms
Metric or ratio Definition
Average ACT scores Average ACT scores for entering first-year students
Average SAT scores Average combined math and reading SAT scores for entering first-year students
First-year acceptance rate (%) Number of students accepted/total number of first-year applications
FTE enrollment Total students enrolled on a full-time-equivalent basis
In-state students (%) Students enrolled who come from within the state/total students enrolled
Retention rate (%) Freshmen students who matriculated for sophomore year/total students who completed their first year
Six-year graduation rate (%) Students who graduate from the university within 6 years/total students in the first-year cohort
Undergraduate students (%) Total number of undergraduate students/total students
Net adjusted operating margin (%) Total adjusted operating income/total adjusted operating expense
Gifts and pledges (%) Gifts and pledges/total adjusted operating revenue
Grants and contracts (%) Government grants and contracts/total adjusted operating revenue
Investment and endowment income (%) Endowment spending income and investment income/total adjusted operating revenue
State appropriations (%) Total state operating appropriations/total adjusted operating revenue
Student-generated revenue (%) (Gross tuition and fees + auxiliary revenue)/total adjusted operating revenue
Financial aid burden (%) Total financial aid expense/total adjusted operating expense
Instruction (%) Instructional expense/total adjusted operating expense
Tuition discount rate (%) Total financial aid expense/gross tuition revenue
Foundation endowment market value ($000s) Market value of foundation as of fiscal year end
University endowment market value ($000s) Market value of endowment as of fiscal year end
Cash and investments to expenses (%) Cash and investments/total adjusted operating expense
Cash and investments to debt (%) Cash and investments/total debt
Cash and investments including foundation to expenses (%) Cash and investments, including those of related foundations/total adjusted operating expense
Cash and investments including foundation to debt (%) Cash and investments, including those of related foundations/total debt including foundation
Average age of plant Accumulated depreciation/depreciation expense
MADS burden (%) Maximum annual debt service/total adjusted operating expense
Endowment per FTE ($) Market value of foundation and endowment/FTE
State appropriations per FTE ($) Total state operating appropriations/FTE
Total debt per FTE ($) Total debt/FTE
Cash and investments Cash, unrestricted and restricted financial investments
Cash and investments including foundations Cash, unrestricted and restricted financial investments, including those of related foundations
Total adjusted operating expense Total operating expenses + institutionally funded financial aid + interest expense – non-cash pension and other postemployment benefits expenses
Total adjusted operating revenue Total operating revenues + institutionally funded financial aid + government appropriations + government grants + endowment spending - realized and unrealized gains/losses

This report does not constitute a rating action.

Primary Credit Analyst:Nicholas K Fortin, Boston + 1 (312) 914 9629;
Secondary Contacts:Jessica L Wood, Chicago + 1 (312) 233 7004;
Laura A Kuffler-Macdonald, New York + 1 (212) 438 2519;
Research Contributor:Athira Chennamangalath, CRISIL Global Analytical Center, an S&P affiliate, Pune

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at

Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back