Moody’s, a credit rating agency, this week downgraded its U.S. higher education outlook from ‘stable’ to ‘negative’, as college and university operations in the country have been thrown into complete disarray due to the spread of the coronavirus.
Many campuses have suspended in-person teaching and moved online, several have told students to leave campus, college athletic events have been canceled and enrollment-related events have taken a big hit. All of these developments will have a major effect on institutions’ bottomlines, which is what led Moody’s to lower its outlook.
Its downgraded outlook follows a recent report from another rating agency, Fitch, which also said the pandemic could pose significant financial challenges to colleges and universities.
Moody’s said in its report, “Outlook Shifts to Negative as Coronavirus Outbreak Increases Downside Risk,” that in fiscal 2021, universities will face disruption in “enrollment, state support, endowment income, philanthropy and research grants.”
The agency said the already precarious financial condition of many universities makes them even more vulnerable to pandemic-related disruptions.
As it is, as much as 30% of universities’ operating performance is weak, said Moody’s. That means it will be more difficult for them to adapt to financial and academic changes. In contrast, 
institutions with more budget flexibility — due to strong liquidity and cash flow — will adapt better and sooner.
