This quick blog post is drawn from advice given to someone considering a job offer at a “V. small college” that shall remain nameless.  I think few academics know to consult Moody’s and other financial ratings. But in this era where institutions are closing at approximately 1 per week, this step has become essential.

Moody’s recently downgraded its financial outlook for higher education as a whole, from stable to negative.

“In December, Moody’s projected a stable 2025 with anticipated revenue growth of 4 percent—the most optimistic outlooks for the sector among a trio of predictions from key financial organizations. Now the ratings agency notes federal policy changes could prompt revenue shortfalls, particularly at research universities, due to a proposed cap on National Institutes of Health reimbursements for research-related costs. That cap, which is currently blocked by a court order, would mean about $100 million in cuts annually for research universities that spend at least $50 million on research and award 70 research doctorates a year, according to Moody’s.

In addition to the NIH rate cut, an increase to the endowment tax would hit wealthy, private universities and likely drive cuts to financial aid or in other spending categories, the report found. The current endowment tax is 1.4 percent for institutions with at least 500 students and $500,000 in assets per student, but recent Republican proposals have floated raising that tax significantly. One proposal has called for a 10 percent tax and changing the per-student endowment threshold from $500,000 to $200,000. Another GOP proposal would set the tax at 21 percent.

Potential disruptions to federal financial aid disbursement, however, would impact all colleges and universities. Moody’s noted that “only a select group of wealthy institutions have the financial flexibility to manage such a scenario without likely seeing steep enrollment decline.” Given steep cuts to the Education Department, Moody’s expressed concern that the Federal Student Aid office could be affected, particularly after last year’s overhaul of the Free Application for Federal Student Aid, which was beset by multiple technical challenges.”

You may have seen headlines and stories like this from the Chronicle and Inside Higher Ed about the whole higher ed sector, but what job seekers may not realize is that you can check the Moody’s ratings for individual institutions. By conducting an intensive review of an institution’s finances, Moody’s among other things reveals the degree to which it is seen as creditworthy to potential investors. Here is the link to Moody’s for private institutions.

Moody’s ratings provide a wealth of insight into the institution’s financial stability and outlook which all job seekers should incorporate into their planning and decisions.

I urges job seekers to also check 2) the institutional accreditors’ website for financial monitoring, and 3) 990 filings, both of which are also free and publicly available.

Now, does all this mean the university will close overnight?  The odds of that in the next few years are pretty low, something like 10% maybe 20% at the absolute most. However, futurist Bryan Alexander keeps close tabs on institutional closures as well as firings of tenured faculty. This is happening at absolutely unprecedented (and accelerating) levels.  Here is one post from Feb. 2025. Read his latest, from April, on the multiple political crises engulfing campuses. Be sure and donate to support his good work. Alexander is not on a permanent contract at Georgetown.