Standard & Poor's has downgraded Dowling College in New York to B from BB. The rating remains on CreditWatch with negative implications.
The college has $56 million in outstanding debt. It is located in Suffolk County, Long Island.
S&P credit analysts Emily Avila and Nick Waugh pointed to several factors in explaining the rating agency's action.
The college has lost access to the credit markets, lost monetary support from its board, and has a history of posting negative operating results, they said.
The college recently sold college real estate investment assets to raise money for operating costs.
For four years the school has experienced dramatic enrollment decreases at the undergraduate and graduate levels.
The school also had liquid resources of $14 million, representing 17% of operations and 25% of debt at the end of fiscal year 2012.
The school's endowment of $2 million is very small compared to its outstanding debt, Avila and Waugh wrote.
Finally, the school has suffered high management turnover.
S&P has asked the college for cash flow projections through 2014. The rating agency expects to receive this information in 60 to 90 days. "We could take further downward rating actions if projections show a significant weakness in the college's cash position," according to the ratings agency.
Representatives of Dowling College did not return a call requesting comment on S&P's action.
Waugh said most of the debt was issued through either the Suffolk County Industrial Development Agency or the Brookhaven Industrial Development Agency.