Santa Ana-based Corinthian Colleges Inc. and other for-profit college operators got a reprieve from proposed federal rules that could cut funding for students at some of the company’s schools.
The Department of Education said Friday it plans to delay its “gainful employment” rule, which threatens to cut off federal student loan money to some schools.
The department plans to move forward on gainful employment and other regulations with a series of public hearings and meetings where for-profit schools would be allowed to elaborate on the 126,000 comments the proposals already have received.
The rule is set to be implemented around July 2012, according to officials. Other proposals would take effect next year.
Shares of Corinthian rose Thursday on rumors that the department might delay the publication of the regulation, initially set for November and now slated for early 2011.
Shares of Corinthian were flat and trading at a market value of about $565 million in afternoon New York trading Friday.
Gainful employment threatens to cut off federal student loan money to some schools where graduates take on too much debt and have few job prospects.
Corinthian and other for-profit school operators are under fire for students who took on more debt than they could afford after seeing a wave of laid-off workers turn to them during the recession.
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.
