Dive Brief:
- Moody's Ratings lowered Columbia University's financial outlook from stable to negative this month, citing a loss of institutional financial flexibility compared to similarly situated colleges.
- Columbia's cash and investments-to-expenses ratio is threatened by the upcoming caps on federal graduate lending, uncertain federal research funding, and a shrinking international student pipeline, Moody's said.
- The news comes as Columbia is moving to sell some $485 million in bonds this month.
Dive Insight:
Columbia has been a recurring target of the Trump administration over antisemitism allegations. In July, the Ivy League institution struck a costly $221 million deal to get its federal grant funding restored.
President Donald Trump's broader attacks on higher ed have also hit Columbia hard, as the university is particularly susceptible to changes impacting graduate enrollment and international students.
In fall 2024, graduate students made up 74% of Columbia's enrollment, per federal data. The same semester, 39% of the student body came from outside the U.S.
Amid federal investigations and disruption to research funding, the university’s operating surplus fell by just over 63% to $112.6 million in fiscal 2025 compared to the year prior.
Moody's warned that the destabilizing effects of the Trump administration's policies are likely to continue. In particular, it noted the graduate federal student loan caps set to take effect in July.
Under the One Big Beautiful Bill Act, federal loans for most graduate students will be capped at $20,500 a year. Students pursuing select "professional" degrees will be allowed to borrow up to $50,000 a year.
Regardless, the annual cost to attend Columbia — one of the most expensive universities in the U.S. — will typically outpace both caps. At Columbia's law school, for example, the annual tuition sticker price is $85,368.
In fiscal 2025, the value of Columbia's total cash and investments was 2.7 times higher than its operating expenses, according to Moody's. Among colleges to which Moody's gave the highest credit rating, the median value of cash and investments was 10.7 times higher than operating expenses.
To cover already incurred expenses and help bridge this gap, Columbia is looking to offer $285 million of tax-exempt bonds and $200 million of taxable bonds, according to Bloomberg. Both Moody's and S&P Global Ratings gave the bonds AAA ratings, the highest each agency offers.
The day before Moody's lowered Columbia's outlook, S&P reaffirmed Columbia's outlook as stable.
S&P expects that the university will "maintain excellent demand, strong management, ample resources, and positive operations," the agency said. "We expect any additional debt will be commensurate with growth in available resources.”
Moody's said Columbia's outlook could return to stable if the university shows it can handle "rising expense pressures and manage risk related to its large graduate programs." The ratings agency is also looking for Columbia's cash and investments-to-operating expenses ratio to fall in line with that of peer institutions.
If Columbia’s outlook remains negative, however, it could see its Moody's credit rating — currently AAA — downgraded in the future
