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Standard & Poor's downgrades Oberlin College's rating

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    A student rides a bicycle on the campus of Oberlin College in 2013. The college's bond rating was downgraded by Standard and Poor's, largely because of declining enrollment.



OBERLIN — Standard and Poor’s, as well as Moody’s Investor Service, lowered Oberlin College’s outlook rating from stable to negative due mostly to declining enrollment.

However, the college’s longterm credit rating of AA from S&P — the second-highest rating that defines it as having a very strong capacity to pay money back — remained unchanged.

In a June 28 report, S&P followed Moody’s October lead and cited the college’s enrollment struggles as a reason for the outlook downgrade. An outlook rating is a prediction, based on economic and business factors, of where its credit rating may end up in the near future.

S&P cited the enrollment drop from 2015 to 2016, when the college had 2,912 students in 2015 and 2,895 in 2016, and another drop in the 2017-18 academic year to 2,827 students as reasons for its labeling.

The two-year outlook isn’t set in stone, said S&P sector leader for U.S. higher education Jessica Matsumori.

“We just see there are particular challenges that they’re facing right now that can lead in the future to a credit profile that is lower than their current rating of AA,” Matsumori said.

S&P also cited the college’s leadership transitions and irregular financial operations as areas of concern that factored into its decision.

In September, the college named Carmen Twillie Ambar as the new president, replacing Marvin Krislov who left to become president of Pace University in New York City. The college July 1 named Rebecca Vazquez-Skillings the new vice president for finance and administration, replacing Mike Frandsen who left in 2017.

The report also cited irregular financial operations, noting about a $3 million deficit for fiscal year 2018. The report noted the college’s dependence on student tuition and fees, accounting for 77 percent of fiscal 2017 revenues.

Scott Wargo, director of media relations for Oberlin College, said the outlook is just a view into the possible future, which is something the college is capable of turning around.

“Oberlin’s financial strength remains robust, as reflected by the maintenance of our AA rating,” he said in an email. “The college has acknowledged and is actively implementing strategies that directly address the challenges which yielded S&P’s negative outlook, an outlook assigned to higher education by Moody’s.”

Oberlin College is not alone in receiving a negative outlook rating. That’s the trend industrywide for colleges and universities. Moody’s also filed a report lowering the outlook on the U.S. higher education sector from stable to negative, based on similar factors shared with the college.

Moody’s report also cited tuition dependency and unpredictable revenue sources.

Joe Mielenhausen, Moody’s senior communications strategist, said Oberlin College’s problems are the same being experienced at other colleges — hence the lowered outlook for the entire sector.

Wargo said the college has been making efforts to stabilize enrollment, which it has put as a top priority. As a result of the college’s efforts, Wargo said the college expects a fall enrollment class of incoming freshmen for the 2018-19 school year that will exceed its enrollment target. It also expects the enrollment to improve in the future.

Contact Bruce Walton at 440-329-7123 or Follow him on Facebook @BWalton440 or Twitter @BruceWalton.

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