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Five State Universities Reach Junk Bond Status

The downgrade is a result of the universities’ reliance on the state funding. (Courtesy: MGN Online)

Credit rating company Moody’s Corp. downgraded five Illinois universities to the lowest ratings possible Thursday and Friday.

Southern Illinois University, Northern Illinois University, Governors State University, Northeastern Illinois University and Eastern Illinois University are now at junk status, meaning if they take out loans, they’ll be paying very high interest rates.

The downgrade is a result of the universities’ reliance on the state funding.

Ron Michaelson, a visiting political science professor at the University of Illinois Springfield, said this new rating could cause major problems for these institutions.

“People start wondering, should I send my high school senior to these universities?” Michaelson said. “Are they going to have to cut staff? Are they going to have to cut faculty? What kind of educational benefits are we going to get? So it just creates a chain of events which is entirly negative for everybody."

Michaelson said the only way he sees universities getting out of this junk bond status is by ending the budget impasse. He said once that happens, it'll offer more financial stability to the institutions.

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