Moody’s Investors Service revised its outlook to negative Monday and affirmed its Aa3 rating on Earlham College. The liberal arts college in Richmond has $36.4 million of direct debt, of which $26.5 million is rated by Moody’s.

Earlham, which has ties to the Quaker religion, enjoys a strong market position and a stable balance sheet, Moody’s analysts said. Its challenges include declining student matriculation — which was at 23% as of fall 2009, down from 30% in 2005 — combined with a modest fundraising record and high-tuition discount rate.

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