IBJNews

Education stocks rise as reports hint at looser rules

Back to TopCommentsE-mailPrintBookmark and Share

Shares of ITT Educational Services Inc., DeVry Inc., and Grand Canyon Education Inc. rose Tuesday after analysts said the U.S. government may loosen proposed rules that would restrict companies’ eligibility for federal student aid.

ITT Educational, based in Carmel, gained $10.42, or 9.6 percent, to $119.20 per share, their biggest gain in seven months.

DeVry, based in Oakbrook Terrace, Ill., rose $6.67, or 10 percent, to close at $71.73, its biggest one-day gain since Jan. 27. Grand Canyon, based in Phoenix, rose $1.07, or 4.1 percent, to $27.35.

Proposed Department of Education rules would require education companies to show that graduates earn enough to afford repayment of their student loans. The government may exempt educators from the regulations when more than half of students complete their degree programs and 70 percent of graduates get jobs in fields relevant to their studies, said Kelly Flynn, a Credit Suisse analyst in New York, in a report to clients Tuesday.

“The new measure effectively removes the significant threat the rules had created for nationally accredited degree programs with typically high default rates,” Trace Urdan, an analyst at Signal Hill Capital Group in San Francisco, said in a note to clients.

The proposed exemption might “fuel investor optimism” that the Department of Education could further ease its proposed regulations in the coming months, Flynn said. She raised her rating on DeVry and ITT Educational to “outperform” from “neutral.”

Bridgepoint Education Inc., based in San Diego, rose $2.26, or 9.4 percent, to $26.34, its biggest increase in almost a year. Corinthian Colleges Inc., based in Santa Ana, Calif., gained $1.19, or 6.8 percent, to $18.62. Education Management Corp., based in Pittsburgh, gained $3.02, or 13 percent, to $25.56, for the company’s biggest rise in six months.

The concession suggests that Education Secretary Arne Duncan wants to avoid a fight with Republicans in the House of Representatives over the proposed regulations, Urdan said. While the exemption doesn’t require congressional approval, it may help Duncan pass his version of the Elementary and Secondary Education Act, which aims to overhaul standards in U.S. schools, Urdan said.

“We believe investors need no longer fear that significant revenues could be at risk in the event that the rules are passed,” he said in the note.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

ADVERTISEMENT