September 26, 2021

Obama signs Executive Order on Financial Aid Student repayments

Obama_signingIn an attempt to ease crushing student debt, President Obama will sign an executive order Monday afternoon that will allow at least 5 million people to cap their student loan payments at 10 percent of their income.

Obama will direct Secretary of Education Arne Duncan to amend student loan regulations to allow for the payment ceiling, which the administration wants to make available to borrowers by December 2015.


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Default management creates a big shift in default rates between 2 and 3 years.

Education Department data released last month shows that rates at nearly all institutions rose when measured for three rather than two years, as federal law will soon require.  Duh… Yet at 243 colleges, or about 8 percent of the 3,168 degree-granting institutions The Chronicle examined, the three-year rate was at least 15 percentage points higher than the two-year rate, a substantial increase, how is that a surprise???  Of those, 83 percent were for-profit colleges We would wager that most loan portfolios would show an increase in defaults when compared to a longer period of time.

YET, the college showing the biggest gap was Professional Business College, a private nonprofit institution in New York City, where the difference between the two-year rate and the three-year rate was more than 30 percentage points.

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Nelnet to pay $55 Million to settle suit

Nelnet will pay $55-million to settle its share of a whistle-blower lawsuit that accuses it and several other lenders of defrauding taxpayers of more than a billion dollars in student-loan subsidies.

The settlement, which Nelnet announced late Friday, is the latest to result from a lawsuit brought by Jon H. Oberg, a former Education Department researcher, on behalf of the federal government.

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Apollo Group gets hammered due to SEC inquiry!

Apollo group is getting hammered today due to its announcement of the SEC inquiry yesterday.  I would have to agree with JPM & Piper Jaffray’s view on this and believe the market is once again over reacting to EDU news…  Their EPS & Enrollment are above expectations & their retention has continued to improve.  In addition they seem to be closer to finally resolving the Qui Tam case.  Unfortunately (except to those who are buying) it looks like the panic is setting in again.  If it proves to be anything I would doubt it to be is a significant.

House Committee on Education and Labor passed The Student Aid and Fiscal Responsibility Act

The House Committee on Education and Labor passed The Student Aid and Fiscal Responsibility Act (SAFRA) of 2009, H.R. 3221, this included the increase of the 90/10 rule to three years.

Maybe all of the fear mongers hovering over the industry should start to realize there is lots of good and that while some minor changes may come down, there is not much likelihood that any major overhaul will occur.

New faculty subgroup on the for-profit edu group

We had received many requests to create a new faculty subgroup within the forprofit edu group on linkedin.  So here it is:  The group is for any & all current, former or those who want to get a job as faculty.

what if the DOE limited growth rates on for-profit schools

I have been speaking with a number of analysts all of who seem to be focused on the Dept. of Ed and possible changes to the for-profit edu industry. One recent discussion focused on the what if scenario if the capped growth rates for for-profit schools. While I doubt something like that will occur, it would present problems for many in the industry. what are your thoughts on this and on other potential areas they may look to change.

Department of Education Conference Call

Department of Education Conference Call

The (DOE) Department of Education held a conference call on Friday that didn’t really clarify any potential upcoming regulatory changes.

Deputy Undersecretary Robert Shireman basically repeated what was published in The Federal Register.

In essence they intend to convene a committee to develop & propose regulations to maintain and/ or improve program integrity in the Title IV, HEA programs

Shireman did not explain the specific reasons which prompted these meetings, other than wanting students to

have access to college and good quality post-secondary education that serves

students and taxpayers.  He stated a couple of times that the DOE wanted and is seeking input regarding potential changes

The real question is: Is this a lead in opportunity for the Obama administration to come up with significant changes with the ability to say that they were proposed to them rather than taking ownership of leading the charge? 

The good news is that Shireman did not attack the utility of for-profit institutions or their role in providing quality education.

He basically said that there are effective schools and less-effective schools in every sector, so the focus needs to be on quality regardless of sector.

Growth continues to look strong in for-profit industry

After speaking with many analysts and marketers it seems like the positive growth is continuing into the second quarter. Lead volume & enrollment growth seem to have continued from the first quarter. Lots of continued interest in investing into the for-profit arena is always a great sign. The only negative area has been the stock prices for many of the public’s. Are you seeing the same continued growth.

EDU stocks trading at low prices & multiples

Take a look at the EDU stocks, now looks to be a good time to buy in at good prices and at multiples as low as they have been in a while.  With all the bullish discussion of late the EDU sector has taken a hit.  With people/investors being short sighted and thinking, hey if this is the beginning of a recover, we need to get out of those counter cyclical edu stocks now as they will surely go down…  Our thoughts are with what Samuel Clemens once wrote: Let us be thankful for the fools, but for them the rest of us would not succeed!  Sure the sheer volume of the selling and shorting may bring these stocks a little lower, but watch them continue to grow, continue to be profitable, and continue to be strong companies…. and ultimately their stock prices will continue to go higher.