Enrollment turnaround nets upgrade for University of New England

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Sound strategic planning amid a challenging higher education landscape for Northeast private colleges landed the University of New England a two-notch upgrade.

Fitch Ratings raised UNE to A-plus from A-minus Friday citing the Biddeford, Maine-based school’s ability to withstand enrollment pressures facing other private colleges throughout New England. The upgrade affects roughly $85 million of revenue bonds the Maine Health and Higher Education Facilities Authority issued on behalf of UNE in 2017. The outlook is stable.

“After a period of rapid expansion, Fitch expects UNE will maintain a generally stable enrollment base and moderate revenue growth despite competitive and demographic pressures in the region,” Fitch analyst Tipper Austin wrote. “The university's very strong cost flexibility and budget management should support continued excellent cash flow to fund potential strategic and capital investments with limited leverage.”

UNE’s total enrollment grew by more than 30% from 2012 to 2016 driven largely by rapid growth of its online graduate programs, which now account for nearly 40% of the university’s full-time students. The school was also aggressive with the addition and expansion of graduate and professional programs in the medical and health fields. Net student charges account for about 90% of operating revenues, but the university has “fairly strong” pricing flexibility with an overall discount rate of 21%, according to Austin.

Total full-time enrollment has fallen somewhat from its historical high point due mainly to increasing competition driving slightly lower incoming classes to the College of Pharmacy and some online graduate programs. UNE’s 2019 full-time enrollment of 6,047 consisted of 3,071 undergraduates, 1,416 graduate students and 1,560 doctoral students enrolled mostly in health-related professional practice programs. The school’s full-time enrollment numbered just 5,150 in 2012 and peaked at 6,770 in fall 2016 .

“The strength of student demand varies across UNE's distinct student segments and programs, but Fitch expects it will support generally stable overall enrollment despite unfavorable regional demographic trends,” Austin said. “The largely traditional undergraduate segment is stable with moderate demand metrics and improving student retention.”

Marketing efforts have been aimed at diversifying UNE’s student draw away from Maine, which now only accounts for 27% of undergraduates. Massachusetts now comprises UNE’s largest percentage of students at 28% with the rest of New England bringing the total to around 80% of the undergraduate population. The school is continuing its diversification efforts to target the larger Northeast region and certain growth areas in the West and South.

UNE’s Fitch upgrade comes three months after Moody’s Investors Service revised its outlook for UNE's A3 rating to positive from stable citing its steady student demand, enrollment diversity and high-demand programs.

“Jumping from an ‘A-minus to an ‘A-plus in our Fitch rating is a confirmation of UNE’s stability and longevity, and it really speaks to the nimbleness that UNE has come to be known for,” President James Herbert said in a statement. “These are particularly challenging times for higher ed, but what the Fitch rating indicates is that we have managed wisely, planned strategically, thought on our feet when we’ve needed to, and continued to offer a first-rate education that students and their families know will pay off for them.”

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Ratings Higher education bonds Maine Health & Higher Education Facilities Authority Maine