Moody's Investors Service has cut the credit rating on $1.5 billion borrowed by West Chester University, Cheyney University, and the 12 other Pennsylvania State System of Higher Education colleges to Aa3, from Aa2.
The state-owned colleges face "weakening state support" under Gov. Corbett, along with "declining enrollment" - the number of full-time students dropped below 107,000 this fall, from 112,000 a year ago - and "weak" applications from feeder high schools, especially in depressed parts of Western Pennsylvania. Moody's also cited "political limitations on the system's ability to raise tuition and fees, and challenges in reducing expenditures" under negotiated labor contracts.
Moody's separately cited "demographic decline," along with expected multimillion-dollar payments from the Jerry Sandusky child sex-abuse case, in cutting Pennsylvania State University's bond rating a notch, to Aa1. The rating service previously had warned that a downgrade of the state-related university was likely.