barrons
November 15, 2019, 8:29pm
1
The pressure to maintain elite status is starting to be reflected in the finances of some of the nation’s pre-eminent private research institutions.
Last month Northwestern University became the latest such institution to have its bond rating lowered by Moody’s Investors Service, the financial-information company. Moody’s cut the university’s rating of nearly $2.2 billion in debt, from its top grade of Aaa to Aa1, its second-highest score…https://www.chronicle.com/article/How-Chasing-Prestige-Is/247545?key=j_DIeWIUtJsVs9ToXQRavkyiGKCdrSd-fFNBjUfP_Q1MajB6yk2Gua8YVpBVOUIzVTB1V0dlb2RxTlhCSGxhaVdEQ3lfaVFlUm1nOWZid25ialR2X25zS0M2dw&fbclid=IwAR0vvidCu2Me1rIlQ6oJ1YZl35me30s7HAGGoXG2DNC6cxewvGcoZktjwOI
Thank you for the Chronicle article. It’s an interesting read.
How does a university with an $11 billion endowment end up with $2.2 billion in debt?
I am assuming that there is some tax related reason for this, but I don’t get it.
Here’s a related article that sheds some light on your question:
“Why Colleges Are Borrowing Billions”
https://www.theatlantic.com/education/archive/2017/10/why-colleges-are-borrowing-billions/542352/
barrons
November 16, 2019, 3:48am
6
LOW rates. Borrow @4 % and invest at 8%.
Twoin18
November 16, 2019, 4:22am
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Invest at what they project (i.e. hope) will be 8%. If you believe that then there’s a bunch of public pension schemes I’d like you to underwrite (actually in most states you already are…).
barrons
November 16, 2019, 10:24pm
8
Or just take the S&P 500 long term
barrons
November 16, 2019, 10:24pm
9