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wsjFor-profit education stocks rose Monday, even as data were released showing rising default rates on government loans to their students, though analysts said investors appeared to be taking a more positive view of the data.
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Analysts said the Department of Education's data on 21% of students at for-profit institutions defaulting during the first three years they were required to make payments wasn't good news, but it was largely expected and not enough to scare investors.
Bridgepoint, the operator of Ashford University and the University of the Rockies, climbed 5.6% to $17.25 in recent trading while ITT, operator of its namesake technology schools, rose 4.1% to $94.62. Apollo, parent of University of Phoenix, gained 4.1% to $58.91, while Corinthian rose 2.3% to $14.01. Also rising was Strayer Education Inc. (STRA), up 2.1% to $209.16, and Career Education Corp. (CECO), up 1.5% to $27.62.
RBC Capital analyst Robert Wetenhall said some of the gains might be coming from comments from the Department of Education, which had the agency taking a "benign" interpretation of the results. He was referring to comments by Dan Madzelan, acting assistant secretary for postsecondary education, made in a Wall Street Journal story Monday morning. Madzelan said the data are unofficial and won't result in sanctions. He added that schools would have time to get their default rates down, and the government "isn't interested in shutting down schools."
"It's really a read on the language," Wetenhall said.
That interpretation by the Department of Education would be important because there are new regulations regarding the three-year default rates for-profit schools, which have sometimes been criticized for aggressive enrollment practices leading to unqualified students getting loans.
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