Moody's Investors Service says it may cut its rating on Penn State's credit.
The news comes as the university deals with fallout from the Jerry Sandusky child sexual-abuse case and sanctions against the school's football team.
Penn State currently has Moody's second-highest possible rating.
The firm said a recent report by former FBI director Louis Freeh and sanctions levied by the NCAA could hurt student enrollment and fundraising for the university.
Moody's says Penn State has about $1 billion in debt.
The announcement coming a day after the NCAA fined Penn State $60 million, banned the school from playing in post-season bowl games for four years, and stripped the team of dozens of scholarships.