Ranking the Ivy League Schools: S&P Edition

Our readers had a lot to say about our post last Tuesday about college rankings. Some accused the author (yours truly) of gloating too hard about Penn’s epic failure. Other commenters took to bashing Forbes Magazine (which ranked Columbia, Cornell, and Penn as #42, #51, and #52 in the country, respectively), with one accusing the Forbes of being ” the S&P of college rankings” and “trying to get some attention by giving low rankings to schools virtually everyone agrees are among the best in the world.”

That gave us an idea. Given the recent hullabaloo about Amurrica’s credit rating being downgraded from “fuck yeah” to “we’re all going to die”, we thought – why not look at the real S&P of college rankings: the S&P itself? What might Standard & Poor’s say about the financial stability of our dear Ivy League institutions? And might Penn be redeemed after its humiliating snubbing by the Princeton Review? Here are the results.

The following list was compiled using S&P’s online ratings finder. For simplicity’s sake, we’ve just listed the long-term credit ratings. A Wikipedia explanation of the ratings can be found here.

Brown University: AA+

“The rating also reflects Standard & Poor’s view of Brown’s:

  • Impressive student demand demonstrated by highly selective admissions and generally impressive demand;
  • Historically good financial performance characterized by good revenue diversity and demonstrated budgetary flexibility;
  • Strong financial resources; and
  • Strong fundraising results.

Partially offsetting rating factors include weaker financial performance in fiscal 2008-2010 with small unrestricted operating deficits, a significant increase in debt from fiscal 2007 to 2010 (including the 2009 issuance of $100 million for working capital), and erosion of expendable resources relative to operating expenses and debt from the fiscal 2007 peak. Management has indicated that it conservatively invested the proceeds of the taxable paper issuance and that it expects a double-digit increase in its endowment market value for fiscal 2011, on top of a 10.2% return for fiscal 2010. Management has no plans at this time for additional debt. On a post issuance basis, the university will have approximately $615 million in total debt.”

Columbia University: AAA

“The ‘AAA’ rating reflects the university’s unconditional general obligation  pledge, supported what Standard & Poor’s views as impressive demand, excellent student quality, and increasingly competitive admissions; a still-strong endowment, which has rebounded over the past few years; and a diverse revenue stream, effective long-range planning, and budgeting that has improved both operations and facilities. Additional credit strengths include Columbia’s strong fundraising history; solid operating performance in recent years and continued strength in sponsored research supported by its medical center. Also factored into the rating are low expendable resources compared with operating expenses and debt for the ‘AAA’ rating category, and a high pro forma debt burden.”

Cornell University: AA

“The ‘AA’ long-term rating reflects our assessment of the university’s:

  • Impressive demand for both undergraduate and graduate/professional degree programs, coupled with an international reputation as one of the largest Ivy League institutions in terms of enrollment;
  • Strong diversity including tuition, medical faculty practice revenues, sponsored research, investment income, private gifts, and state support;
  • Long-term investments valued at approximately $5.1 billion as of Dec. 31, 2010;
  • History of successful fundraising; and
  • Strong management team with solid planning and policy practices.

In Standard & Poor’s opinion, partially offsetting credit factors include:

  • Historical operating deficits on a full-accrual basis, although there was an operating surplus in fiscal 2010 and operations are typically positive on a cash basis;
  • Below-average financial resource ratios with expendable resources in fiscal 2010 equal to 109% of operating expenses and 173% of outstanding debt; and
  • A bullet payment of $250 million due in 2014 and longer-term capital pressures caused by the postponement of debt issuance and capital plans.”
Dartmouth College: AA+
(Detailed credit report not available)
Harvard University: AAA

“The ‘AAA’ rating reflects Standard & Poor’s view of the university’s impressive financial resource levels; expendable resources consistent with other ‘AAA’ rated private colleges and universities; and strong revenue diversity as well as a demonstrated ability to raise funds.

Also supporting the rating is the impressive demand for Harvard’s academic programs at the undergraduate, graduate, and professional levels, and a growing level of sponsored research, partly spurred by stimulus funds; balanced financial performance on a budgetary basis in fiscals 2009 and 2010, despite a modest operating deficit in unrestricted net assets based on generally accepted accounting principles (GAAP) in both years; and expectations that future operating performance will be breakeven or better despite reduced endowment payouts. Harvard’s debt burden is in Standard & Poor’s view moderately high but remains manageable compared with its impressive financial resources particularly given management’s intentions to reduce capital spending for fiscals 2011 and 2012.”

Princeton: AAA

“The ‘AAA’ rating reflects the university’s general obligation pledge, supported by our assessment of Princeton’s impressive demand for undergraduate and graduate programs, historically strong financial performance, and good revenue diversity,” said Standard & Poor’s credit analyst Charlene Butterfield. “We believe Princeton’s significant investments, solid financial resource level, conservative fixed-rate debt structure, and stable and experienced leadership team, also support the rating,” said Ms. Butterfield.

Partly offsetting rating factors considered by Standard & Poor’s include Princeton’s:

  • Large pro forma debt load, with additional debt beyond the series 2011 bonds expected between the next 12 and 18 months, and additional debt expected on an approximately annual basis during the next five years that could pressure financial resource ratios;
  • Significant bullet maturities related to series 2009 debt; and
  • Historical reliance on endowment spending in the university’s operating budget, though this was reduced significantly in fiscal 2010.”
University of Pennsylvania: No rating listed. 

 

Yale University: AAA

“The rating reflects our opinion of Yale’s historically strong financial performance and its successful fund raising efforts,” said Standard & Poor’s credit analyst Jessica Matsumori. “Further supporting the rating, in our view, is the impressive demand for Yale’s academic programs.”

 

So there you have it. Rejoice, for according to S&P, most of our schools are as credit-worthy, or worthier, than the U.S. government. As for our angsty, image-conscious Penn readers: we understand there has been consternation about Penn’s rankings lately (or lack thereof), and honestly, we have no idea why S&P didn’t give you a credit rating. A few things though:  1) You’ll probably be back on top of US News in no time. 2) College Prowler has deemed Penn students the hottest in the Ivy League, so that should make you feel better about yourselves. 3) It’ll be okay. Really.