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ERIC Number: EJ822250
Record Type: Journal
Publication Date: 2008-Nov-14
Pages: 1
Abstractor: ERIC
Reference Count: 0
ISSN: ISSN-0009-5982
One Debt-Financing Option May Increase Risk of College Bankruptcies
Basken, Paul
Chronicle of Higher Education, v55 n12 pA20 Nov 2008
A common type of variable-rate financing has suddenly increased the risk of bankruptcy for an unknown number of colleges, said two experts at credit-rating agencies. The threat affects mostly less-wealthy colleges that have used variable-rate bonds either to get a better price when borrowing or because they lacked bond ratings and had little other choice, said the analysts, from Moody's Investors Service and Standard & Poor's. The analysts, Mary Peloquin-Dodd, of Standard & Poor's, and Roger D. Goodman, of Moody's, declined to predict whether and how many colleges might actually face bankruptcy, saying much still depends on the speed of an economic recovery and on what else the federal government does to help a recovery along. They agreed, however, that the use of variable-rate bonds is dangerous now, because colleges can, in a matter of weeks, have to begin repaying millions of dollars of what they had thought of as long-term debt.
Chronicle of Higher Education. 1255 23rd Street NW Suite 700, Washington, DC 20037. Tel: 800-728-2803; e-mail:; Web site:
Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A