Weekly Market Update


Thursday, October 26, 2017

A new survey suggests that state funding of need-based aid for 2015-2016 was unexpectedly steady, compared to 2014-2015. California, Illinois, New Jersey, New York, North Carolina, Pennsylvania, Texas and Washington together contributed about $5.5 billion to undergraduate need-based grants, representing 44% of the $12.5 billion total in state provided financial aid.

At the federal level, about $125 billion of financial aid was distributed in the 2015-2016 school year, but the Department of Education is failing to hold schools accountable, according to a position paper published by The Center for American Progress. The paper recommends that the Department reshape its accountability targets and metrics to encourage under-performing schools to improve.

In Other News

  • Illinois has restored aid payments to its public colleges and universities, ending a two-year budget impasse. Unfortunately, the ongoing fiscal uncertainty suppressed enrollment, deepening the fiscal crisis for Illinois' public institutions.
  • Due to decreasing enrollment and funding, many New Mexico public universities may increase tuition to levels that few can afford. Some are suggesting that New Mexico should consider merging institutions and services while assigning funding based on performance goals.
  • Memphis College of Art will close due to decreasing enrollment, increasing debt, and no prospects for long-term financial stability.
  • The Washington Post reported that 39 US News Top 150 national colleges and universities had freshman classes with 20% or more Pell Grant qualified students in 2015. Washington and Lee University has the lowest Pell share in the group, while Williams College has the highest.
  • The 10-year Treasury yield rose above 2.42% on Tuesday, the first time above 2.40% since May. The increase may reflect the known hawkishness of potential Fed Chair nominee, John Taylor. Jeffrey Gundlach, DoubleLine Capital's Chief Investment Officer, expected rates to continue rising.
  • Kenneth Ricci, a Notre Dame alumnus, promised the University $100 million as an unrestricted gift. The pledge is one of the largest ever unrestricted gifts to a university.
  • The University of Wisconsin announced changes to its M.B.A. programs, but provided few details. Some suspect that the University's full-time M.B.A. program may be replaced by specialized, shorter-term offerings. Wake Forest, Virginia Tech, and Simmons Colleges have already closed their full-time M.B.A. programs.

Rating Agency Update

  • Moody's assigned Aa2 to Reed College's Series 2017A Bonds. The outlook is stable.
  • Moody's affirmed its Aa3 rating on Oberlin College. The outlook was revised to negative from stable.
  • Moody's assigned Aaa to University of Texas System Board of Regents' Series 2017A Permanent University Fund. The outlook is stable.
  • Moody's assigned Aa3 to Colorado School of Mine's Series 2017B Institutional Enterprise Revenue Bonds and affirmed its Aa3 rating on Colorado School of Mines. The outlook was revised to negative from stable. S&P assigned A+ to the same issue. The outlook is stable.
  • S&P assigned A to Sacred Heart University's Series 2017I-1 and 2017I-2 Revenue Bonds. The outlook is stable.
  • S&P assigned AAA to University of Texas System Board of Regents' Series 2017A Permanent University Fund. The outlook is stable.