Enrollment pressure brings negative outlook for a college in New York

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Persistent enrollment declines at Daemen College led Fitch Ratings to assign a negative outlook to the western New York school.

Fitch Ratings, which has Daemen at BBB-minus, the lowest investment grade rating, cited undergraduate enrollment pressure the liberal arts college faces from competition with New York State’s free tuition program at public colleges that began in 2017. The negative outlook applies to series 2018 bonds issued through the Town of Amherst Industrial Development Agency.


Daemen, which has a main campus in Amherst and a satellite location in Brooklyn, saw student demand negatively impacted by the free tuition program’s rollout two years ago since roughly 93% of its enrollment is from New York State, according to Fitch analyst Heather Tucker.

“The negative outlook reflects the risk that further enrollment and revenue pressure may lead to a rating downgrade,” Tucker wrote in a June 28 report. “Fitch expects that the College's leverage position will remain comfortably within investment-grade tolerance for its business profile, with some flexibility to absorb pent up capital needs.”

Tucker said the rating reflects expectations that Daemen's full-time student enrollment will “stabilize” with the growth of its Brooklyn campus and graduate programs. She noted that Daemen’s 2019 year-to-date application volume is well ahead of prior years with nearly 430 freshman deposits. Daemen also intends to increase its transfer class by growing online programs in nursing and social work to combat shrinking community college enrollment in the area.

Daemen is marketing its links with other schools for various programs to increase its draw. One such program with Tennessee's Lincoln Memorial University Medical School enables students to complete three years at Daemen and then transfer to complete bachelor's degree classes at LMU before immediately starting medical school.

Freshman acceptance rates fluctuated around 50% between 2014 and 2018 before increasing to 65% last year, according to Fitch. Student matriculation declined “steadily” during this period to 17% for fall 2018.

Daemen is largely tuition-dependent with tuition revenues comprising roughly 89% of unrestricted operating revenues in 2018.

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