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More colleges are breaching their debt requirements: S&P

S&P analysts view the covenant breaches as a symptom of pressure on colleges, many of them smaller and private. In their report, they point to the impact of several tough years on the higher education sector.

“At the start of the pandemic, universities across the country went into crisis-control mode, and we saw hiring freezes, personnel reductions, and cuts to discretionary expenses,” the analysts wrote.

COVID-19 brought revenue declines and new costs, but the colleges also got $77 billion in federal relief through the Higher Education Emergency Relief Funds. By fiscal 2023, the analysts noted, most institutions had burned through HEERF dollars. Meanwhile, costs have been rising with higher salaries and inflation.

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