Moody's Investors Service has reviewed all but one of the 20 rated institutions of higher learnning in Massachusetts, upgrading five, downgrading three, and affirming 11.

The report kicks off the rating agency's planned state-by-state review of all rated colleges and universities.

The 19 universities included in the review of Massachusetts pay debt service on more than $3.2 billion of bonds, according to a Moody's report released Monday. Simmons College remains under review.

Massachusetts has some of the highest rated private universities in the nation, the report says. But that strength can also work against some of the schools with smaller endowments and more students dependent on financial aid.

Edward M. Murphy, executive director of the Massachusetts Health and Educational Facilities Authority, said the competition among schools for funds has grown fierce.

"Harvard University is one of the strongest issuers in any sector of the municipal market." Murphy said. "This makes it difficult for other schools, but also helps the overall impression about universities in Massachusetts."

The authority serves as the issuer for a large percentage of the debt that is issued by private universities the state.

Moody's affirmed all three of the state's triple-A rated schools: Harvard, the Massachusetts Institute of Technology, and Radcliffe College.

Three smaller colleges -- Amherst College, Wellesley College, and Williams College -- were boosted to Aa1 from Aa.

"At the upper end of the spectrum in Massachusetts, there are some of the best schools in the nation," Naomi Richman, vice president and assistant director of Moody's higher education ratings group, said in an interview yesterday. "These triple-A and double-A1 schools are examples."

There are few triple-A rated schools remaining in the nation, according to analysts at the agency.

Nationwide, Moody's rates as triple-A Northwestern University, Princeton University, the University of Chicago, Columbia University, the California Institute of Technology, Stanford University, Yale University, the University of Notre Dame, Dartmouth College, and Rockefeller University.

Richman of Moody's said that a school's ability to draw students from outside its geographic region and the ability to expand the size of its endowments is critical to maintaining a high rating.

Demographic changes in both New England and the Mid-Atlantic states have forced the larger, richer institutions to search for students in other regions, especially the South and Southwest, Moody's said in the report.

"The demographic studies simply suggest a shrinking of the amount of 18 year olds in New England," Richman said. "Schools are competing for the best kids from all over the country.'

Murphy said he was particularly happy to see the Berklee College of Music receive an upgrade to A from Baa1.

"It's always difficult for specialty schools to get their message across to the ratings agencies," Murphy said. "I think that was part of the reason Bentley College, a business school, was downgraded." Bentley was dropped to Baa1 from A by Moody's.

The agency cited reduced applications, an over-reliance on students needing financial aid, and rising tuitions as being largely responsible for the three downgrades.

"Schools are going to be especially challenged by increased costs of operations," Murphy said. "Tuitions cannot continue to increase like they have in the last 10 years."

Unlike other states, Massachusetts does not spend a great deal of money on higher education. Both Richman and Murphy said that is attributable to the strength of the state's private institutions.

As a result, the state is able to maintain its high quality of higher education, even when the state's general obligation rating is the lowest in the nation, they said.

The report states that over two-thirds of the college students in the state attend a private school. Nationally, less than one-third of college students attend private schools.

Moody's has not set a firm timetable for when reviews on the colleges and universities in the rest of the states will be completed. Richman said reviews in California, Minnesota, and New York are forthcoming.

"It's difficult to get too much done during the summer on education ratings," Richman said. "Between vacations and the usual shutdowns that take place, this may be the only report done this summer."

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