For-profit schools shares sink as Corinthian reports regulatory probe, PBS highlights problems

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Sector Snap: For-profit schools shares sink

NEW YORK — Shares of for-profit schools tumbled more deeply than broader markets Tuesday after Corinthian Colleges Inc. said the Department of Education had criticized financial aid practices of its Everest Colleges.

Analysts also cited Tuesday’s planned airing of documentary about the sector, called College Inc., on the PBS television program Frontline.

The prospect of increased regulation and criticism of increasing student-loan default rates have weighed on the sector’s shares since President Barack Obama took office.

The Education Department under Obama wants to get rid of bonuses for the schools’ recruiters and link graduates’ student aid payments to income as default rates soar.

Corinthian Colleges Inc. said Tuesday in a regulatory filing that the Department of Education had found that its Everest College Phoenix division misrepresented program costs and financial aid availability. The government said Corinthian’s actions were an “intentional evasion” of federal financial aid requirements, according to the filing.

Corinthian said it was responding to the claims. If the government ultimately decided Corinthian broke rules, it could fine the company.

Corinthian shares fell $1.09, or 6.8 percent, to $14.93.

Wedbush Securities analyst Ariel Sokol said that shares of schools mentioned in the documentary College Inc. fell because of Tuesday’s planned airing.

A review in The Chronicle of Higher Education, a trade publication, said the documentary focuses on high tuition, student debt loads and heavy-handed recruiting, calling these the “unsavory elements” of the growing for-profit education sector.

The review said the documentary shows Bridgepoint Education Inc.’s Ashford University; Education Management Corp.’s Argosy University chain; the University of Phoenix, owned by Apollo Group Inc.; Grand Canyon Education Inc.; and Corinthian’s Everest Colleges.

Bridgepoint shares fell 90 cents, or 3.7 percent, to $23.65; Education Management dropped 50 cents, or 2.4 percent, to $20.54; Apollo slid $2.36, or 4 percent, to $55.96; Grand Canyon slipped 47 cents, or 1.9 percent, to $24.61.

Shares of DeVry Inc., Lincoln Educational Services, Capella Education Co., Career Education Corp. and ITT Educational Services Inc. also dropped, falling from 3 to 5 percent.