Student selectivity and higher education institutions credit ratings

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.

Citation

Gottesman, A. and Ismailescu, I. (2021), "Student selectivity and higher education institutions credit ratings", Journal of Financial Economic Policy, Vol. 13 No. 1, pp. 136-159. https://doi.org/10.1108/JFEP-10-2019-0200