A Rhode Island state corporation sold $96 million in bonds on behalf of Brown University to refund a previous issuance.
The bonds mature between 2024 and 2043, yielding between 2.56% and 3.4%. They received a rating of Aa1 from Moody’s Investors Service and AA+ from S&P Global Ratings.
“The affirmation of Brown’s Aa1 issuer rating reflects its stellar student demand as an Ivy League comprehensive research university with very strong philanthropic support,” according to Moody’s. Brown charges a much higher tuition than the national average and raises a significant amount through fundraising every year.
The issuance comes as higher education costs in the United States grow at a record clip, especially at elite universities. The average tuition at a private nonprofit four-year institution was $37,600 in 2020-21, according to the Department of Education, marking an 18% increase since 2010-11. At Brown, tuition grew by more than 50% during the same period, according to the university. For the 2023-24 academic year, tuition reached $65,656.
The bonds will be issued by a state corporation, the Rhode Island Health and Educational Building Corporation, which will loan the proceeds to Brown. The bonds are general obligations of Brown, backed by its full faith and credit, and special obligations of the corporation. Brown recorded $1.3 billion in operating revenue last fiscal year.
Jefferies LLC served as underwriter on the issuance, purchasing the bonds for more than $110 million. The price reflected a premium of $14 million.