For-Profit Schools Show Big Rise in Student Loan Defaults, Some Near Worrisome Threshold (ESI) (APOL) (DV) (EDMC)
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Rating Summary:
6 Buy, 9 Hold, 6 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Yesterday data from the government showed that student loan defaults rose sharply, with for-profit schools seeing the biggest rise.
2009 2-year official cohort default rate increased from 11.6% to 15% at for-profit schools, this versus 7.2% for public institutions (up from 6%) and 4.6% for private institutions (up from 3.4%).
Analysts at Goldman Sachs noted that in some cases the 2009 level is approaching the 25% threshold, which could put Title IV funding at risk if sustained at this level.
The firm noted that ITT Educational (NYSE: ESI) had the highest 2-year CDR at 22.5% followed by University of Phoenix (Apollo) (Nasdaq: APOL) at 18.8% and Carrington California (DeVry) (NYSE: DV) at 16.7%.
ITT Technical Institute and The Art Institute (NASDAQ: EDMC) showed the greatest degree of deterioration from 2008, increasing 10.2 pp and 7.3 pp, respectively.
2009 2-year official cohort default rate increased from 11.6% to 15% at for-profit schools, this versus 7.2% for public institutions (up from 6%) and 4.6% for private institutions (up from 3.4%).
Analysts at Goldman Sachs noted that in some cases the 2009 level is approaching the 25% threshold, which could put Title IV funding at risk if sustained at this level.
The firm noted that ITT Educational (NYSE: ESI) had the highest 2-year CDR at 22.5% followed by University of Phoenix (Apollo) (Nasdaq: APOL) at 18.8% and Carrington California (DeVry) (NYSE: DV) at 16.7%.
ITT Technical Institute and The Art Institute (NASDAQ: EDMC) showed the greatest degree of deterioration from 2008, increasing 10.2 pp and 7.3 pp, respectively.
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