) -- Shares of
The Washington Post
hit their 52-week low on Thursday of $348.83 in response to the new regulations that could affect its Kaplan division, the company's biggest profit driver.
While the operating income for its Kaplan education division was up 88% in the second quarter, new regulations that could thwart its growth may be on the horizon.
The U.S. Government Accountability Office recently
conducted undercover tests
at 15 for-profit colleges and found that four of those colleges encouraged fraud. The tests also found that all 15 of the colleges were "deceptive" and used "questionable marketing practices."
Now the GAO is cracking down on all for-profit colleges and revising the Title IV federal education loan regulations.
The proposed changes would strictly require the company to show that completion of its courses leads to "gainful employment in a recognized occupation," and that after graduating students can achieve a certain debt-to-income ratio.
The regulations would also revise the definition of a "credit hour" to keep admission workers and financial aid advisers from misrepresenting the cost and duration of education programs.
Shares of other education sector companies have also taken the hit. On Thursday
American Public Education
shares plummeted to a 52-week low down close to 4% to $25.51, while
shares plunged to its 52-week low of $19.38.
The Department of Education will finalize the new rules by November 1 this year, and they will go into effect on July 31, 2011.
Washington Post shares are up more than 2% in after hours trading to around $357.
-- Reported by Theresa McCabe in Boston.
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