Downgrade? Moody's reviewing Penn State's credit rating

The agency on Friday said it will consider whether to lower its assessment on the university’s $1bn of debt, which is now rated Aa1, just one notch below triple A…

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“Higher education is first and foremost a business that is driven by reputation,” said John Nelson, head of higher education research at Moody’s. “Student demand, the attraction of faculty and the ability to draw donations are all based on reputation.”

Moody’s said it will evaluate “the potential scope of the reputational and financial risk” arising from the allegations, including potential lawsuits and settlements, weaker student demand or philanthropic support, changes in the university’s relationship with the state and significant management or governance changes.

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