Moody's downgrades Pennsylvania state colleges' credit rating
- The credit rating on $1.5 billion borrowed by the 14 Pennsylvania State System of Higher Education colleges has been cut from Aa2 to Aa3 by Moody's Investors Service as a result of "weakening state support," "declining enrollment" and "weak" applications from feeder high schools.
- Additionally, Moody's downgraded Pennsylvania State University's rating to Aa1 due to "demographic decline" and the expectation of multimillion-dollar payments stemming from the Jerry Sandusky child sex-abuse scandal.
- The Pennsylvania State System of Higher Education colleges' debt load has increased significantly in the last eight years, but Moody's concludes that their current cash flow is enough to make bond payments.
From the article:
Moody's Investors Service has cut the credit rating on $1.5 billion borrowed by West Chester University, Cheyney University, and the 12 other Pennsylvania State System of Higher Education colleges to Aa3, from Aa2. The state-owned colleges face "weakening state support" under Gov. Corbett, along with "declining enrollment" - the number of full-time students dropped below 107,000 this fall, from 112,000 a year ago - and "weak" applications from feeder high schools, especially in depressed parts of Western Pennsylvania. Moody's also cited "political limitations on the system's ability to raise tuition and fees, and challenges in reducing expenditures" under negotiated labor contracts. ...
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