Santa Ana-based Corinthian Colleges Inc. and other for-profit school operators saw shares rise on market reactions to a report that proposed federal regulations that might not affect profits as much as anticipated.
Shares of Corinthian, which runs more than 100 campuses in the U.S. and Canada, closed up more than 9% on a market value of about $915 million.
Last week, a report by Baltimore-based research firm Signal Hill Capital Group LLC suggested changes to a proposed federal rule known as gainful employment might be less harmful to the for-profit school industry, according to a Bloomberg LP report.
Corinthian and other for-profit schools had projected major losses in profits as a result of the new regulations.
The Department of Education outlined rules in June that require for-profit school operators to provide students with graduation and job-placement rates and limit how the companies pay recruiters to bring students in.
The proposals are part of an effort to crack down on students who take on too much federal aid and run the risk of defaulting on loans.
The rules are set to take effect a year from now and would apply to more than 600 colleges and universities. They’re aimed squarely at for-profit school operators, including Corinthian and its rivals.
Competitors that fall under the federal rules include Phoenix-based Apollo Group Inc., Indiana’s ITT Educational Services Inc. and Career Education Corp. of Illinois.
Corinthian runs schools offering degrees in healthcare, criminal justice and other areas.
The company and others saw big growth during the recession but have come under fire for students who took on more debt they couldn’t afford.
Corinthian’s shares have grown in recent weeks after falling nearly 25% in June.
