Dive Brief:

• The University of Chicago’s plans to increase its massive debt load has put its credit rating at risk.
• The university plans to borrow as much as $900 million over the next four years, which has prompted Moody’s Investors Service to cut its credit outlook to negative.
• Chicago is already the most highly leveraged university amount the richest schools in the U.S., according to Bloomberg.

Dive Insight:

Moody’s doesn’t like the direction this is going in. Chicago has a $1.7-billion development plan, which combined with extremely low interest rates is driving its borrowing plan. The new borrowing combined with the $3.6 billion in debt it already carries means it will need strong cash flow to cover its debt service. The university lost 21.5% on investments in its endowment portfolio in 2009, and the debt has grown from $2.4 billion four years ago. The debt is 53.7% of its $6.7-billion endowment, compared to the second-most-leveraged rich school, Duke, at 45%. Chicago has more than 5,300 undergraduates and 9,500 graduate and professional students.