S&P Global Ratings lowered Columbia’s credit rating earlier this week from a BBB- to a BB+, citing falling enrollment rates and low student success rates.
The report listed the college’s outlook as “negative,” a designation that indicates non-investment grade or “junk” status.
The downgrade reflects a national trend as small and mid-sized private colleges face budget pressures from rising costs, flat or declining enrollment and changes in federal policy, according to a March report from Moody’s Ratings. While a junk rating can make borrowing more expensive, it does not mean a college is at risk of defaulting or even closing.
So what does this mean?
Similar to an academic grading scale, credit ratings are indicated by an anchor letter between A and D, followed by a notch such as a plus sign, a minus sign or even a number in some cases, that is meant to further specify the degree of risk. The higher the grade, the lower the risk and vice versa.
BBB anchor ratings are linked to a moderate level of risk, while BB anchor ratings denote an elevated or substantial risk. As the S&P Global Ratings criteria indicate, the final rating can be within one notch of the anchor.
Columbia, which is dependent on tuition to bring in revenue, is facing continued financial strain as a result of enrollment declines, according to the credit rating report, which also notes that as financial resources have declined, cash reserves have gotten tighter.
Leadership turnover has made it harder for the college to carry out its strategic plan, according to the report.
Former President and CEO Kwang-Wu Kim stepped down in July 2024 after 11 years, with Senior Vice President and CFO Jerry Tarrer becoming interim president and CEO the next day. In June, Provost Marcella David also departed, and Suzanne McBride, previously dean of Faculty Affairs, was appointed interim provost while the college conducts a national search. Shantay Bolton, who was named the college’s next president in May, began her new position on July 1.
In an email sent to the campus community on Friday, July 25, that was signed by Tarrer, McBride and Emmanuel Lalande, Columbia’s new senior vice president of enrollment strategy and student success, the three leaders acknowledged the seriousness of the downgrade but also portrayed it as an opportunity.
“In close collaboration with the Board of Trustees and our financial advisors, our leadership team has proactively addressed the institution’s financial health,” according to the email. “We remain focused on positioning the college for long-term sustainability.”
A downgrade to junk bond status means that Columbia is considered a higher credit risk, but if the college does not need to borrow money, the immediate impact is limited. However, the downgrade could further hurt the reputation of the college, particularly among prospective families and donors, which could further influence enrollment and fundraising over time.
The college is still recovering from the fallout of a historic part-time faculty strike in Fall 2023 that nearly doubled the financial deficit, which was already at about $20 million. Columbia began a series of cost-cutting measures the next year and a half, including a massive restructuring, closing programs and laying off staff and tenured faculty.
During this time, enrollment continued to decline, as the Chronicle previously reported. Columbia’s Spring 2025 enrollment was 4,952 students, an 11% decrease from 5,570 students in the fall 2024 semester. The college lost roughly the same percentage between fall and spring after the seven-week part-time faculty strike in 2023.
The S&P report stated that the college can still meet its obligations and currently has no planned bond issuance, but this shift in credit rating signals a need for reform in budget structure, program alignment and enrollment strategy.
Jourdan Thompson, a spokesperson for the college, said the college will not face any interest rate penalties on existing fixed-rate debt.
Tarrer told the Chronicle that the college has already taken steps to strengthen the college’s financial position, including “implementing budget adjustments, streamlining operations and identifying new revenue streams, and we will continue these efforts.”
He said the college will remain focused and committed to students, “providing a high-quality education supporting student success, from enrollment through graduation and meaningful careers,” reassuring that the college’s daily operations will continue as normal.
“We are confident in our path forward and the strategic initiatives underway to support Columbia’s sustainability,” he said.
In downgrading Columbia’s credit rating, S&P also cited the college’s student success rates compared to its peers and its high percentage of Pell Grant recipients.
Columbia considers its peers to include the Berklee College of Music, Rhode Island School of Design, Emerson College and more locally, the School of the Art Institute of Chicago and the Milwaukee Institute of Art & Design.
Among those institutions, Columbia has the highest percentage of Pell Grant recipients, about half of the student body, according to the federal data. On average, Columbia students received $14,380 in scholarships for the 2024-2025 academic year and $11,069 in governmental aid.
Columbia’s first-year retention rates have increased slightly from 59.5% in 2012 to 61.5% in 2023, the last year available, according to the college’s Office of Institutional Effectiveness.
Even as tuition has increased — 5% each year the last two years — financial assistance has kept pace, meaning the majority of Columbia students still pay only about half of the full cost to attend, as the Chronicle previously reported.
In the email sent Friday, Columbia said it would host a series of campus conversations with faculty and staff in the coming weeks, including a “dedicated forum” slated for the fall.
“This update and rating is just another wake-up call for the college to really focus in on the financial issues present,” said Student Government Association President Jenna Davis, a senior fine arts major.
Although Columbia has been taking steps toward that goal, “we have a long way to go,” she said.
Copy edited by Vanessa Orozco
Resumen en español
S&P Global Ratings rebajó la calificación crediticia de Columbia College Chicago a grado especulativo, citando la disminución de la matrícula, bajas tasas de éxitos estudiantil y dificultades financieras. Aunque la universidad aún puede cumplir con sus obligaciones, la rebaja podría afectar su reputación y encarecer futuros préstamos.
La administración de Columbia asegura que está tomando medidas para mejorar sus finanzas mediante recortes presupuestarios y nuevas estrategias de ingresos. A pesar del aumento en la matrícula, la mayoría de los estudiantes reciben ayuda financiera significativa. La universidad organizará foros en otoño para discutir los próximos pasos con el profesorado y el personal.
Resumen escrito por Manuel Nocera
Texto editado por Brandon Anaya
