WASHINGTON — Moody’s Investors Service is reviewing Howard University for a possible downgrade of its credit rating as the historically Black college faces financial challenges.
The Washington Post reports Moody’s has assigned an A3 rating to Howard since 2011 for about $290 million in bonds as the school was planning campus upgrades. That rating indicates a low risk the university would default on its debt. The next lower rating would indicate a moderate risk.
Moody’s said in a statement Monday that the review “reflects Howard University’s extremely pressured environment.” The agency cited an enrollment decline, cuts in federal funding and a drop in the university’s hospital business. Howard faces a $25 million reduction due to Congress’ automatic budget cuts.
In January, Moody’s expressed a negative outlook for the higher education sector.
University officials said there is still a strong demand for a Howard education.
“Like most universities today, Howard University faces revenue challenges,” university spokeswoman Kerry-Ann Hamilton said. “But we remain engaged in a proactive and aggressive multi-pronged and multi-year effort to address those pressures, which has resulted in four consecutive years of positive operating results and an endowment that is above pre-recession levels.”
Howard’s college deans have objected to the school’s financial management. In a letter disclosed July 1, the deans wrote that “fiscal mismanagement is doing irreparable harm” to the school.
