Loan Repayment Data Creates Hysteria In For-Profit School Stocks (COCO, STRA, CPLA, APOL)
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For-profit education companies saw shares fall before the opening bell on Monday after the government reported that many students are not repaying school loans.
The Department of Education report from Friday showed that ITT Educational Services Inc. (NYSE: ITT), Washington Post Co.’s (NYSE: WPO) Kaplan school chain, Strayer Education Inc. (NASDAQ: STRA) and Corinthian Colleges Inc. (NASDAQ: COCO) all had repayment rates below 35 percent.
The agency has proposed new regulations that would make schools ineligible for government-backed student loans if fewer than 35 percent of recipients are not paying back the funds or if graduates are spending more than 12 percent of their income to pay down student debt.
The schools that fall below 35 percent could still remain eligible for government loans due to having relatively small student debt burdens.
The proposed regulations would allow programs that 45 percent or more of its students repaying loans to continue to be eligible for government-backed loans, while those with repayment rates in the range of 35 percent to 45 percent could face potential restrictions.
Shares of several for-profit schools are down on Monday in early trade.
Shares of the biggest education company Apollo Group Inc. (NASDAQ: APOL), the owner of University of Phoenix, are trading up 6.73 percent to $41.56 in early market movement Monday.
Others that are higher include Grand Canyon Education, Inc. (Nasdaq: LOPE), Universal Technical Institute Inc. (NYSE: UTI) and Bridgepoint Education, Inc. (NYSE: BPI) which all had repayment rates above the 45% threshold.
The Department of Education report from Friday showed that ITT Educational Services Inc. (NYSE: ITT), Washington Post Co.’s (NYSE: WPO) Kaplan school chain, Strayer Education Inc. (NASDAQ: STRA) and Corinthian Colleges Inc. (NASDAQ: COCO) all had repayment rates below 35 percent.
The agency has proposed new regulations that would make schools ineligible for government-backed student loans if fewer than 35 percent of recipients are not paying back the funds or if graduates are spending more than 12 percent of their income to pay down student debt.
The schools that fall below 35 percent could still remain eligible for government loans due to having relatively small student debt burdens.
The proposed regulations would allow programs that 45 percent or more of its students repaying loans to continue to be eligible for government-backed loans, while those with repayment rates in the range of 35 percent to 45 percent could face potential restrictions.
Shares of several for-profit schools are down on Monday in early trade.
- ITT (NYSE; ESI) down $8.58, or 13.3 percent to $44.22
- Washington Post (NYSE: WPO) down $43.51 or 12.67 percent to $299.97
- Strayer Education (Nasdaq: STRA) down $26.26 or 13 percent to $1174.23
- Corinthian Colleges (Nasdaq: COCO) down $1.66 or 24.92 percent to $5.00
- DeVry Inc. (NYSE: DV) down $3.75 or 8.78 percent to $38.96
- Capella Education Co. (NASDAQ: CPLA) down $8.80 or 12.54 percent to $61.40
- Lincoln Educational Services Corp. (NASDAQ: LINC) down $1.02 or 8.45 percent to $11.05
Shares of the biggest education company Apollo Group Inc. (NASDAQ: APOL), the owner of University of Phoenix, are trading up 6.73 percent to $41.56 in early market movement Monday.
Others that are higher include Grand Canyon Education, Inc. (Nasdaq: LOPE), Universal Technical Institute Inc. (NYSE: UTI) and Bridgepoint Education, Inc. (NYSE: BPI) which all had repayment rates above the 45% threshold.
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