Bond rating agencies downgraded three colleges in the Northeast in the past two weeks in the latest sign of the growing
Moody's Ratings and S&P Global Ratings cited enrollment declines as a reason driving rating cuts for the three schools: two in Pennsylvania, and one in New York. The Northeast is expected to be hit hard by a drop in high school graduates, according to the Western Interstate Commission for Higher Education.
Moody's downgraded St. Lawrence University's rating by one notch to Baa2, two steps above junk, citing "persistent student market challenges" and an 8.5% drop in full-time enrollment in the fall.
"Heightened market competition and regional demographics will continue to constrain student revenue prospects," Moody's analysts wrote in a report last week.
St. Lawrence spokesperson Kim Asch said in a statement that the university, based in Canton, New York, near the Canadian border, is encouraged that Moody's included a stable outlook on the rating, which "reflects the progress the university is making to strengthen its long-term financial position." The school is implementing a plan to balance its budget by fiscal 2029.
Moody's also moved Gannon University's rating down one notch to Baa3, the lowest level of investment grade.
Gannon — with a campus in Erie, Pennsylvania, and a graduate campus in Florida — is in the midst of a merger with Ursuline College.
"Given demographic trends, limited pricing power, and execution risks associated with the integration with Ursuline College, prospects for a return to stronger operating performance in the near term remain uncertain," the Moody's analysts said in that report last week.
Another Pennsylvania college saw its bonds downgraded earlier in January. S&P dropped its rating on revenue bonds sold by Saint Francis University, a Catholic school based in Loretto, where enrollment fell almost 8% in the fall.
To be sure, some higher-ed institutions received positive rating news this month. S&P raised its ratings on revenue bonds for New York's Bard College by two levels to BBB-plus after the school received an influx of donations.
In 2021, the Open Society Foundations, founded by George Soros, agreed to match $500 million of donations to raise $1 billion for the school's endowment. The foundation
