Higher education bonds

Nearly half of America's private colleges and universities reported negative operating margins in fiscal year 2023, and the trend was even worse in the Midwest.

The Education Finance Council is seeking clarification on bond rules related to student loans.

With its cash balance eroding due to a budget imbalance, the university, under the watchful eye of Arizona's governor, will undergo system-wide changes.

Moody's Investors Service cited thinning operating performance for the downward outlook revision.

Lake Erie College entered into a forbearance agreement with bondholders after the school didn't meet certain covenants it agreed to as part of a debt sale. 

Gov. Katie Hobbs' proposed fiscal 2025 budget calls for agency fund sweeps, a new eligibility requirement for a costlier-than-expected universal school voucher program, and other measures to combat a rising shortfall.

The negative outlook on the Phoenix-based university's Ba1 rating is due in part to its battle with federal regulators, including the U.S. Department of Education, which it sued in 2021.

The Arizona Board of Regents adopted a report recommending greater oversight of its three universities after the University of Arizona hit financial trouble.

"Higher education is going to be facing continued challenges in the near term," said Tom Kozlik, managing director at Hilltop Securities.

The approval last month by Texas voters of a constitutional amendment to create an endowment fund led S&P Global Ratings to revise the school's outlook to positive from stable.