Getting Moody with finances

IU recently had its credit rating upgraded from Aa1 to Aaa by Moody’s Investors Service, making the University one of only seven public schools nationwide to earn the agency’s highest credit rating.

The school has more than $800 million in debt and plans on issuing $275 million more in debt over the next year.

Although it is paying down its debt every year, that still sounds like quite a lot of debt to handle, doesn’t it?

Moreover, the change from a credit rating of Aa1 to Aaa was not due to changes in IU’s finances but was a result of a restructuring of Moody’s grading criteria for public and private debt. This means the award was handed to the University out of the blue.

But because so few public universities in America earned a rating of Aaa, IU’s financial stability is evident. Moody’s was very selective in determining who should attain the highest rating, so IU is right to feel honored by this accomplishment.

IU won’t just sit on its new credit rating, though. It’s always important for the campus to expand, and with new, confident investors, the University will be able to finance its obligations at much lower rates.

The administration will be able to expand its construction without putting too much pressure on its already hefty debt load.

Students will be seeing new projects in the works over the next few years. The University is probably interested in building more dorms, classroom space and, hopefully, a new basketball arena.

So what will this shiny new Aaa placard mean to students? University Treasurer MaryFrances McCourt claims we will see slower increases in tuition.

How much that will account for is unknown for now, but it’s not likely to be a large relief.

Other costs like off-campus housing, textbooks and food will increase over time and may well offset any benefits students encounter due to slower tuition growth.

Current students will also probably not be around to see the completion of all the projects IU is working on during the next few years.

But don’t let that stop you from visiting the construction site of a new basketball palace your senior year.

If you put your ear up to the fence, maybe you’ll be able to hear the cheers of a future NCAA championship.