Paul L. Caron

Monday, March 23, 2020

Moody's Downgrades Higher Education From 'Stable' To 'Negative' Due To The Coronavirus

Chronicle Higher Education, ‘The Worst-Case Scenario’: What Financial Disclosures Tell Us About Coronavirus’s Strain on Colleges So Far:

Moody'sMoody’s Investors Service issued a bleak forecast this week for higher education in America, downgrading it from “stable” to “negative” in light of the coronavirus pandemic. The news was yet another alarming sign for colleges, many of which have been hollowed out by the past decade’s demographic changes and are now trying to determine what effect the public-health crisis and expected recession could have on their balance sheets.In issuing its forecast, on Wednesday, Moody’s cited a laundry list of factors that could drag down revenue, including “disruption in enrollment patterns, state support, endowment income and philanthropy, and research grants and contracts.”

Echoing that grim prognosis already are some colleges themselves, which in financial disclosures since the dawn of the pandemic have underlined just how little they know about its possible consequences — and just how bad things could get.

In an issuance of bonds this week, the University of Cincinnati, for instance, sought to disclose any number of ways the virus could disrupt its operations, including declines in revenue, enrollment, demand for on-campus housing, and interest in university programs involving travel or international connections. ...

Harvey Mudd College and the University of Washington also cited the outbreak in bond issues this week. Both assured bondholders that they were continuously monitoring the situation, and taking steps in coordination with college, state, and federal health officials.

For complete TaxProf Blog coverage of the coronavirus, see here.

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