[May 12, 2014]

Fitch Updates Rating Criteria for U.S. Colleges and Universities

Fitch Ratings has updated its sector-specific rating criteria report titled 'U.S. College and University Rating Criteria'. The report replaces Fitch's existing rating criteria published on May 10, 2013 and includes minor new details and clarifications of the risk factors and metrics considered in Fitch's analytical approach. No changes to existing ratings are envisioned as a result of the updates to this criteria report.

Fitch has identified seven key rating drivers that affect the credit quality of higher education issuers:

--Operational Effectiveness: An institution's ability to effectively manage enrollment and position itself vis-a-vis competitors is critical to maintaining or improving its financial position.

--Demand Flexibility: Institutions able to achieve enrollment goals without sacrificing student quality tend to be less susceptible to changes in demand and related revenues.

--Fund-raising: Demonstrated fund-raising prowess may enable an institution to reduce reliance on student-generated funding streams and fund investments in scholarships, programs, and infrastructure.

--Revenue Diversity and Operating Performance: A lower level of revenue concentration suggests an unexpected interruption in funding from one source will not impact an institution's ability to prudently manage expenditures in line with revenues.

--Balance Sheet Resources and Liquidity: Institutions with a sizable financial cushion are better protected from an unexpected, material decline in core revenues and/or unexpected significant increase in costs.

--Debt Burden: The ability of an institution to consistently generate strong debt ervice coverage may help offset a high pro forma debt burden.

--Management/Governance Evaluated: As part of the analysis of an institution, Fitch reviews management's capabilities and outcomes, as addressed in the master Revenue-Supported Criteria, dated June 3, 2013.

This updated criteria report should be read in conjunction with Fitch's 'Revenue-Supported Rating Criteria' published June 3, 2013. The latter, master criteria report details how Fitch assigns ratings to revenue-supported obligations and entities in the broader public finance sector.

Both criteria reports are available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: U.S. College and University Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748013

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