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Private Colleges Are in Trouble, and Their Creditors Are Worried

  • Demographic challenges ahead as pool of graduates seen falling
  • ‘I don’t think there’s an end in sight,’ S&P analyst says
Bethune-Cookman University

Bethune-Cookman University

Photographer: Jeff Greenberg/Universal Images Group Editorial via Getty Images

The challenges facing U.S. private colleges are starting to become their bondholders’ problem, too.

An unusual bankruptcy by New York’s College of New Rochelle this year will likely leave investors recovering only a fraction of what they are owed. A Christian college is asking bondholders to sell back their securities for as little as 10 cents on the dollar to help it emerge from a two-decade fight for survival. Others are defaulting on debt limits contained in bond contracts, a potential harbinger of deeper strife to come.