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One law school’s credit rating drops to junk-bond status

Posted Dec 9, 2013 8:19 AM CDT
By Debra Cassens Weiss

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Standard & Poor’s has issued a new credit rating analysis of law schools that finds declining enrollment is hitting some of them particularly hard.

The result is a growing gap in credit quality between law schools, report TaxProf Blog and the Wall Street Journal Law Blog (sub. req.) The report notes that the number of first-year students is now at levels last seen during the late 1990s, when there were about 20 fewer law schools.

S&P rates 123 of the nation’s ABA-accredited law schools, including five stand-alone schools not affiliated with a larger university. Credit quality for those five schools has been deteriorating, along with the credit profiles of universities with lower credit ratings that had previously relied on law schools for extra cash, according to the report (PDF).

“We believe the credit profiles of law schools has diverged,” the report says, “with the strong becoming stronger or remaining stable while the weak are becoming weaker.”

One stand-alone school, the Thomas Jefferson School of Law in San Diego, saw its credit rating to junk bond status in October, the Law Blog says. The school now has a B + rating with a negative outlook.

The ratings for the five stand-alones are:

• New York Law School (A-/Negative)

• Brooklyn Law School (BBB+/Negative)

• Albany Law School (BBB/Stable)

• Thomas M. Cooley Law School in Michigan (BBB/Negative)

• Thomas Jefferson School of Law (B+/Negative)

The report also notes “weak law school demand,” in terms of applications or enrollment, at Widener University, Pa.; Regent University, Va.; University of Puerto Rico; Pace University, N.Y.; Western New England University, Mass.; Suffolk University, Mass.; and Nova Southeastern University, Fla.

Prior coverage:

ABAJournal.com: "S&P lowers outlook for Brooklyn Law School"

ABAJournal.com: "S&P revises outlook for Albany Law School, citing enrollment drop"

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