Moody’s Calls Trump’s Proposed Budget Cuts a Credit Negative for Higher Ed

Steep cuts in research funding and the elimination of some programs in President Trump’s budget blueprint would be a credit negative for the higher-education sector, according to a report released on Tuesday by Moody’s Investors Service.

In the “skinny budget” released this month, President Trump called for a $9-billion cut at the U.S. Department of Education, reductions at academic research agencies such as the National Institutes of Health and the National Science Foundation, and the elimination of several programs aimed at helping low-income and minority students.

“The budget proposal signals reductions as well as potentially large shifts in the administration’s research-funding priorities,” Susan Fitzgerald, an associate managing director at Moody’s, said in a news release.

“If Congress passes the budget as proposed,” the credit-rating agency’s report states, “it would largely be a negative for U.S. higher education and the not-for-profit sector.” The likelihood of that happening, the report notes, is slim to none.

Several parts of the budget that affect higher education as a sector, such as Pell Grants and historically black colleges, are “credit neutral” in terms of budget reductions, as both, for the most part, escaped the deep budget cuts or elimination seen elsewhere. The elimination of $3.9 billion in surplus funding from the Pell program would not, by itself, have a major negative credit impact, the report says.

The analysis comes on the heels of a report by Politico that the Trump administration wants to cut $3 billion from the Education Department this fiscal year. Congressional appropriators are unlikely to approve the cuts, Politico reports.

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