Haverford's Bond Rating & "Fiscal Responsibility" Downgrades

Colleges and Universities A-Z Haverford College
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Parents of prospective students, please add whether a college’s modest decline in financial health might sway your child to to opt for a comparable but fiscally-healthier college.

Also, is Haverford’s second bond-rating downgrade by Moody’s within nearly two years and its not-stellar showing this month in the U.S. Education Department’s “fiscal-responsibility test” manifesting itself in any observable and negative way on the educational quality and resources available to current or future students? Perhaps Haverford students could comment on any campus impacts they notice.

Although still a good bond rating of A1, Moody’s Investor Service issued the downgrade on Oct. 1, 2015, from Haverford’s previous Aa3 rating, which itself was an August 2013 downgrade from Aa2. The A1 rating is the fifth rung of Moody’s 21-step rating scheme that ranges from the top Aaa rating to the bottom C rating. Moody’s currently places the college’s credit at the top of the medium-grade category with low credit risk. The TREND of downgrades, and not the A1 rating itself, is more concerning. Moody’s October downgrade stated that Haverford’s “…operating deficits are expected to continue through at least 2017, albeit at lower levels as the college addresses current issues of fundamental financial imbalance.”

For (a very selective) perspective:
Aa1 (2nd-rung) bond ratings are given to Swarthmore and Dartmouth.
Aa2 (3rd-rung) bond ratings are given to Univ. of Chicago, Bryn Mawr, Bowdoin and Carleton.
A1 (5th-rung) Haverford shares with Union, Bates and St. Olaf.
Ba2 (12th-rung) is Bard, in the middle of Moody’s category considered speculative and subject to substantial credit risk. Caa2 (18th-rung) is Franklin Pierce in New Hampshire, middle of the category considered “speculative of poor standing and are subject to very high credit risk.”

The recent elimination of Haverford’s all-grant (“no student loan”) financial aid policy likely was one move the college made to improve its “books.” Did the college’s modest fiscal constraints in any way motivate Pres. Daniel Weiss to leave in 2015 after just two years and, previously, Pres. Emerson after just four years?

Moody’s ratings are one thing. But the U.S. Department of Education this month came out with new college financial ratings, as reported in the 03/11/16 Chronicle of Higher Education article titled “159 Private Colleges Fail Education Department’s Financial-Responsibility Test.” On its ratings scale of 1-3 (below 1.5 is “failing”), Haverford is given a 2.3 rating, whereas a top rating of 3 is given to Bates, Bryn Mawr, Carleton, St. Olaf, Swarthmore and Union.

Interestingly, although Moody’s gives both Dartmouth (Aa1) and Univ. of Chicago (Aa2) high bond ratings, the U.S. Dept. of Ed. rates them at 2.3 (tied with Haverford) and 2.2 respectively. Chicago, I know, is undertaking a massive building/renovation campaign with a debt/cost equal to about 56% of its endowment’s value. I don’t know what’s happening at Dartmouth.

Bowdoin (Aa2 with Moody’s) received a rating of 2.9. Even Bard, with a Ba2 rating from Moody’s got a 2.4 (higher than Haverford) rating from the Dept. of Ed. Franklin Pierce (Caa2 with Moody’s) received a 1.5 rating – just above “failing.” The Dept. of Ed.'s ratings are: “based on financial ratios that include factors such as net worth, operating losses, and the relationship of assets to liabilities” for the 1,889 institutions that award federal student aid.

Your thoughts?

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I am a Haverford student who has not noticed any impacts on campus. Also, Weiss left because he was offered a job as the President of the Metropolis Museum of Art. He had been an art history professor before and felt like the job offering was too great to pass up. I would urge students considering Haverford to not fall into the trap of thinking that all of these schools are similar. Haverford is a very unique place because of the atmosphere the Honor Code fosters.

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What a service you’ve done for prospective students and families, MinnesotaDadof3. Thank you. I would like to learn more about this and I hope other students will, as tonrox has done, weigh in with their perspectives.

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Just to be clear, Pres Weiss left because he was offered the position as head of the Metropolitan Museum of Art in NYC, the world class museum on 5th Ave. He expressed his regret to the Hford community about leaving but said that it was truly a once in a lifetime job offer.

Hford’s endowment is close to $500 million which is pretty good sized, considering that it is smaller student body than most other LACs. As I recall, Bates’ endowment was under $300 million, and Kenyon’s is in the mid-$300 million range, both schools with larger student bodies.

While another data point for comparison among schools, I wouldn’t read too much into the bond rating or the new federal rating. With any kind of rating, the question is, what is being measured – and what is the relevance of that measurement to my decision.

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Hi Minnesotadad,

To answer your question whether a college’s modest decline in financial health might sway your child to to opt for a comparable but fiscally-healthier college, I can’t directly answer that as my child applied ED to Haverford. I can say that I am not concerned, however. I would urge you if you are concerned to pick up the phone and call Haverford and ask this question and see what their response is.

I am no expert, but I know bond ratings are affected by / manipulated by the same things that can alter rankings for collges. Here is a very interesting article which directly discusses how colleges knowingly and intentionally alter applications criteria in an effort to manipulate rankings. More applicants means fewer admittees, and higher selectivity gets them a stronger rating for Moody’s).

http://www.bloomberg.com/news/articles/2015-02-12/colleges-use-bag-of-tricks-to-juice-application-numbers

One thing I appreciate about Haverford is that they have not dropped essays, nor opted to be test optional in an effort to drive more applicants, yet at least. (Perhaps this is reflective of their honor code?) This article shows how this is done. Haverford, despite size, unique honor code which is certainly not for everyone, and to this point lack of marketing manipulation is perhaps more selective than other schools which have flooded students with marketing materials, dropped essays and test requirements to get more applicants. It is extremely important to not buy into the hype of college rankings and to a lesser degree the subtle shift in Moody’s rankings. What drove ‘us’ or my son in the college process was trying to find a selection of truly ‘best fit’ colleges where he could thrive academically, socially etc. Neither Moody’s slight drop in rating, nor US News ranking swayed him from other fiscally ‘healthier’ colleges nor colleges that were ranked higher.

If truly concerned, call Haverford.

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Good point, 2mrmagoo. My daughter is seriously considering Haverford for this Fall. She loved the place when she visited and is going to attend the April 17 admitted-students event. If you care to talk about why your son chose Haverford, I’d be interested to hear.

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My daughter applied ED for the class of 2020. She had visited 11 other LACs in the Northeast before making a final trip to the East Coast to experience Haverford. She was taken immediately with the beautiful campus, the surrounding neighborhood and the close proximity and easy access to Philadelphia and NYC. The current students that she spoke with were very friendly, helpful, open and encouraging. She sat in on a great class with a dozen students taught by a visiting professor and loved it! She interviewed with a senior student who made her feel very comfortable. The idea of being part of consortium and having the ability to take classes at the Bryn Mawr campus that is less than five minutes away was part of the appeal, too. She just felt like it was a perfect fit. Very inclusive, liberal and diverse, with no Greek System. The Honor Code appeals to her as it spoke to the quality and integrity of the students that are attracted to Haverford. The financial aid package that she got is very generous as Haverford is a need blind school in the admission process and meets 100% of need.

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Brother Ray, My son chose the school for many of the same reasons as hiislandmom’s daughter. His search started with mid-size to small Universities/colleges. Over the many months of searching he came to realize he wanted to attend a small college (LAC) primarily because of the seminar style classes, emphasis on undergraduates, strength in sciences as well as humanities (he’s undecided as to major) and strong collaborative community. While he visited many schools that shared these qualities, in Haverford he found a place that also felt more like him. Whether valid or not he picked up on vibes at other schools that just didn’t feel like him ( a strong athletic lean, more competitive than collaborative atmosphere, or a bit of intellectual arrogance etc). Haverford’s honor code was a huge draw as well. Finally, he decided he wanted a small LAC within a larger consortium for the added academic and social opportunities. Ultimately all the schools on his list were great schools with similar academics and opportunities. Haverford just felt like it fit best.

Good luck to your daughter in her decision making.

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Looks like Haverford is moving to a more need-aware admissions stance: http://www.philly.com/philly/education/20160626_In_a_financial_pinch__Haverford_College_will_cap_financial_aid_and_expand_the_freshman_class.html