For-Profit Education Stocks are Hitting Highs After Trump Settlement

Stephen L Kanaval  |

The Trump University settlement this month kept our current President Elect from having to testify in the now defunct real estate seminar program. The Trump counsel claimed they would have won the legal battle, but instead decided to allow Trump to focus on transitioning the country to his new administration. New York Attorney General Eric Schneiderman had been lambasted by Trump since the beginning of the state action, and Schneiderman was defiant and victorious in the face of the 45th President following the decision. He said, Today’s $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university.” After the election, we wrote about how for-profit education stocks were riding high. It would seem, and many are predicting, that the incoming Trump administration will devote little time and money to enforcing the rules Obama put in place.

For-profit colleges prior to the Obama Administration’s shutdowns were a multi-billion dollar industry. The Administration has regulated these colleges in many ways, most recently was the “gainful employment rule,” stating that colleges must track their graduates performance in the workforce. If graduates fall short in the field, colleges and programs will lose funding. When the rule was enacted in 2015, a total of 1,400 programs were forced to close. Commissions headed by Senator Elizabeth Warren and investigations by state attorneys closed many colleges including ITT Technical Institute and Corinthian Colleges.

Now, it is looking like the sector itself could see a swing toward many leaders who do not have experience in education. Many Obama administration devotees will likely head for the door and many reports out of Washington show that the department is feeling low. Many people see their life’s work going up in flames, according to reports. Trump will likely bring in many newcomers and the current mission will probably be lost in new policies. Worst case scenario for the sector is a serious downsizing rather than an outright closing as some have feared. Yet, the reports and leanings look to be very good for for-profit schools to start earning again. The market clearly sees this and many for-profit education companies are doing very well, here are some highlights below:

Strayer University (STRA) has reached a 52-week high.

Capella Education Co. (CPLA) has reached a 52-week high.

Grand Canyon Education, Inc. (LOPE) has reached a 52-week high.

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Companies

Symbol Name Price Change % Volume
LOPE Grand Canyon Education Inc. 126.47 1.47 1.18 343,474 Trade
STRA Strategic Education Inc. 185.84 -2.20 -1.17 159,002 Trade

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