Student selectivity and higher education institutions credit ratings

In: Journal of financial economic policy, Band 13, Heft 1, S. 136-159

Abstract

Purpose
This paper aims to investigate the relation between the creditworthiness of US institutions of higher education and their student selectivity (i.e. demand and quality).


Design/methodology/approach
The authors study whether the impact of student selectivity differs across public vs private universities; across the credit quality of the given public university's state; and across the level of state appropriations for the given public university.


Findings
The authors find that student quality and demand measures are significantly associated with their corresponding institution's creditworthiness, especially for private universities.


Originality/value
For public universities the association is weak and, contrary to the expectations, does not depend on the state credit quality or level of state funding. The findings are robust to the inclusion of control variables.