Eastern was recently placed on a list of Illinois state universities that Moody’s Investors Service has placed under review for a potential credit downgrade.

A credit downgrade could result in the universities paying hundreds of thousands of dollars more than they are already paying per year.

If downgraded, Eastern would go to a B1 for Auxiliary Facilities System Revenue Bonds and to Caa1 for Certificates of Participation, according to Moody’s.

While Eastern is not considered to be in “junk status,” a B1 rating is considered high-risk but with a superior ability to repay short-term debt.

Moody’s downgraded Eastern’s credit rating in June, and its rating fell after Eastern spent almost all of its liquidated cash by the end of FY16.

In February 2016, Eastern’s Auxiliary Facilities System Revenue Bond was downgraded to Ba1 from Baa3 and the Certificates of Participation to Ba3 from Baa3.

Then again in June of 2016, Eastern’s AFS was downgraded to a B1 from Ba1 and the COPs to Caa1 from Ba3.

Credit ratings with a score of A-Aaa are considered to be low credit risks while scores of Caa-C are at a high credit risk.

Ba1 institutions are considered to be a substantial credit risk, but show the ability to repay short-term debts.

Ba3 is considered a substantial credit risk with an acceptable ability to repay short-term debt.

According to Moody’s, revenue bonds are secured by the net revenues of the AFS, student fees and tuition.

Credit ratings describe how likely a borrower is to pay back bonds or loans. The lower the credit ratings, the higher interest rates are for the borrower.

Moody’s said the review was a result of the state’s lack of a budget providing the necessary funding to state institutions for the fiscal year.

Updates on this story will come as more information becomes available.
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