NEW YORK (AP) â¿¿ DeVry led decliners in education stocks Monday after a Credit Suisse analyst said the for-profit school could be hurt by proposed regulatory changes and an improving job market that could slow enrollment. The administration has pushed hard for gainful employment regulations, which stipulate that graduates of schools must not spend more than 8 percent of their income on paying student loans. It's meant to help improve school quality â¿¿ making sure students are qualified and the courses help increase their incomes â¿¿ as student loan defaults soar. If schools failed to pass this test, the government could block their access to federal loans for students, the bulk of their revenues. In early April, the Education Department said schools with 50 percent graduation rates and 70 percent job placement rates would be exempt from a proposed rule linking graduates' incomes to required debt payments. Analyst Kelly Flynn, however, said Washington sources believe the more lenient proposal might not wind up in a draft of the law that will be posted by mid-May or June. Flynn downgraded DeVry and ITT Educational Services Inc. to "neutral" from "outperform," cutting target prices to $65 from $75 and $110 from $135, respectively. Shares of DeVry Inc. fell $4.59, or 6.6 percent, to $64.87, while ITT stock dropped fell $2.07, or 1.8 percent, to $109.71. Shares of Apollo Group Inc., which runs the largest for-profit school, the University of Phoenix, also slid 93 cents, or 1.5 percent, to $62.60, while Corinthian Colleges Inc. stock fell 59 cents, or 3.3 percent, to $17.30. Career Education Corp. fell 61 cents, or 1.8 percent, to $33.49 and Strayer Education Inc. dropped $2.54, or 1 percent, to $250.49. Meanwhile, Flynn cited DeVry's warning on slower enrollment growth in one of its divisions and ITT's warning on higher advertising spending.
For-profit schools have seen big gains in enrollment because of the recession and high unemployment. As the job market improves, people may not feel as much as a need to bolster their resumes.