Dartmouth College, Its Bond Rating Downgraded, Takes On More Debt

Standard & Poor’s Ratings Services announced today that it had lowered Dartmouth College’s bond rating because of operating deficits, a decline in the college’s endowment, and its debt load. Dartmouth’s rating will go from AAA, the highest possible rating, to AA+. The rating service said it expected the college would remain a strong institution because of its Ivy League reputation and its solid appeal to students.

Given that the downgrade was attributed in part to the college’s debt, the following news may be more than coincidental: Dartmouth announced today that it would issue $400-million in bonds to pay for campus projects and generate a cash reserve. An article in The Dartmouth said that “college officials had originally planned to issue the bonds in 2008, at which point they had confirmed Dartmouth’s triple-A rating,” and that “given this rating, the college is exposed to little risk as a result of this financial strategy.” Now that a AAA rating is no longer a given, Dartmouth is likely to have to pay a higher interest rate on its debt.

A recent article in The Chronicle discussed some of the woes in Hanover, N.H., following dozens of layoffs at Dartmouth, in which the college tried to cut $72-million from its budget. —Scott Carlson