Shares of Santa Ana-based for-profit school operator Corinthian Colleges Inc. dropped 10% on Thursday after another education company said it is having more student loan requests rejected by lenders.
New York-based Apollo Group Inc., which runs University of Phoenix and other schools, said in a release that private loans have become more difficult to get due to tightening credit conditions.
After the announcement by Apollo, analysts at BMO Capital Markets said Apollo’s exposure to private loans was low, at around 4%. Some of its competitors are more tied to loans, they said.
The analysts cited Corinthian’s exposure as an example, saying more than 10% of the company’s revenue was from private loans.
Nationwide, private loans to students have been affected by rising delinquencies in repayment. Legislation passed last October that cut $20 billion in subsidies to lenders made it more difficult for smaller lenders to compete with larger ones such as Reston, Va.-based Sallie Mae Inc.
Earlier this week shares of Corinthian shot up when Washington Post Co., which owns the Washington Post and operates post secondary schools through its Kaplan Higher Education unit, disclosed it took an 8.1% stake in Corinthian.
One analyst noted that Washington Post could use its stake to enter into buyout talks with the company.
