Semester

Summer

Date of Graduation

2025

Document Type

Dissertation

Degree Type

PhD

College

College of Applied Human Sciences

Committee Chair

Erin McHenry-Sorber

Committee Co-Chair

Rodney Hughes

Committee Member

Louis Slimak

Committee Member

John Campbell

Abstract

This dissertation examines the financial pressures facing colleges and universities, focusing on the impact of accreditation outcomes and bond credit ratings. Utilizing a quantitative approach, the study posits that adverse accreditation outcomes and credit rating downgrades can be anticipated by observable, measurable attributes at higher education institutions. Additionally, it explores institutional responses following these adverse events.

Data was collected from IPEDS, FSA, DAPIP, BLS, and Moody’s Investors Service, covering the period from 2012 to 2022. Logistic regression models estimated the odds of negative accreditation outcomes and credit rating downgrades based on predictor variables such as enrollment levels, expenses, revenue, financial metrics, admissions selectivity, and economic conditions. Separately, ordinary least squares regression models analyzed revenue, expenses, and acceptance rate two years after such an event.

The results indicate that certain institutional characteristics significantly affect the likelihood of receiving a negative accreditation review or a Moody’s downgrade. In separately modeling both negative scenarios, a lone variable – unemployment rate – was found to be statistically significant in both models in the same direction. Other variables that were significant in both models but with opposite effects include non-white enrollment, out-of-state enrollment, graduation rate, and institutional control. Institutional characteristics were seen to have large effect sizes in the accreditation review data (e.g., HBCUs, Privates, and those on HCM), whereas the model fitted to Moody’s downgrades showed attention to institutional finances (e.g., revenue and expenses).

In a separate analysis of aftereffects, institutions that received negative accreditation reviews or credit rating downgrades exhibited minimal to no significant effect sizes on acceptance rates, revenue, or expenses two years later. The sole exception was in the expenses model, in which a credit rating downgrade resulted in a mean predicted decrease of $19.1 million in expenses.

This study contributes to the literature by illuminating common and uncommon institutional behaviors before and after receiving accreditation sanctions or credit rating downgrades. The findings provide valuable insights for higher education decision-makers to identify and address financial risks proactively, enhancing institutional stability and resilience.

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