Penn State Credit Rating Downgraded Due to Sex Abuse Scandal

Moody’s Investors Service has downgraded Penn State’s credit rating from Aa1 to Aa2 on Friday due to the financial fallout from the Jerry Sandusky child sex abuse lawsuits.

Despite the move, Moody’s outlook on the university is stable. The company also indicated that Penn State’s research, fund-raising and enrollments remain strong. “We expect that Penn State will remain a leading U.S. public university with favorable student demand, positive operating performance, high donor support and a strong research position,” the report reads.

“This action will have no impact on tuition, and fortunately, due to historically low interest rates and no anticipated borrowing in the near future, will have a negligible financial impact,” says David Gray, Penn State’s senior vice president for Finance and Business/Treasurer in a statement released by the school.

University officials say they take Moody’s action seriously, but were not surprised by it in light of the current economic climate and the multiple challenges facing the institution from the child molestation scandal involving Sandusky, the school’s former assistant coach.

In June, he was convicted of sexually abusing 10 boys over a 15-year period. He is now serving and 30-60 year prison sentence.

Read Penn State’s statement.

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