Investors fled for-profit college stocks Thursday after sector bellwether Apollo Group Inc. predicted a 40-percent drop in student enrollment next quarter and withdrew its forecast for next year. Carmel-based ITT Educational Services shares closed at $56.44 each, down almost 15 percent for the day.
The Obama administration released a proposal that would tighten for-profit colleges’ access to federal student aid,
threatening an industry that received $26.5 billion in U.S. funds last year. Carmel-based ITT Educational Services
is among those potentially affected.
For-profit colleges like ITT Technical Institutes need tougher oversight and regulation, according to a report from a Democratic
Senate committee chairman that questions the industry’s advertising spending, tuition costs and reliance on taxpayer
The Obama administration proposed banning for-profit colleges, including Carmel-based ITT Educational Services Inc., from
tying recruiters’ pay to the number of people they enroll, saying high-pressure sales tactics induced students to take
out government loans they can’t afford.
The Carmel-based operator of for-profit colleges pulled in profits of $85.7 million, or $2.46 per share, up nearly 44 percent
from the same quarter a year ago.
Shares of ITT Educational Services rose 9.6 percent Tuesday, their biggest gain in seven months.
ITT Educational Services and other for-profit educators are buying not-for-profit colleges to gain access to their regional
accreditation. The tactic could fuel rapid growth but makes critics uncomfortable.