Shares of embattled Santa Ana-based vocational school operator Corinthian Colleges Inc. rallied Thursday on speculation of a delay in proposed federal rules that could cut funding for students at some of the company’s schools.
Corinthian’s shares were up about 5% near the close of trading on a market value of about $575 million.
The stock rallied on comments from Education Secretary Arne Duncan that the government is keeping “options open” on a timeline for implementing rules.
The Education Department is expected to release a timeline for regulations Friday.
Analysts speculate the department might delay its proposed “gainful employment” rule, which threatens to cut off federal student loan money to some schools.
Campuses where graduates take on too much debt could be denied federal funding starting next year.
Corinthian and other for-profit school operators are under fire for students who took on more debt than they could afford.
The company gets the bulk of its revenue from students with federal loans.
Corinthian runs more than 100 campuses in the U.S. and Canada that offer degrees in healthcare, criminal justice and other areas.
The company launched a marketing campaign earlier in the week that highlights its graduates and takes issue with the proposed federal rules.
The campaign is geared toward lawmakers who may have influence with the Education Department.
The uncertainty of regulation has wreaked havoc on shares of Corinthian, which surged during the recession as idled workers sought training for new jobs.
Corinthian’s shares are down some 60% so far this year, even after Thursday’s gain.
