Stock prices of for-profit education companies shot up yesterday after news that a federal education official who had closely scrutinized the industry was stepping down from his post.
The Chronicle of Higher Education reported that U.S. Education Deputy Undersecretary Robert Shireman would leave his job this summer. Shireman had focused much of his career on reforming the bank-based federal student loan program – a goal he achieved with the move to direct lending at all colleges, the website reported.
U.S. Department of EducationRobert Shireman
Shireman has roots in the Bay Area. Before joining the Department of Education in 2009, he led the Institute for College Access and Success, an Oakland-based nonprofit. Inside Higher Ed reported he was likely to return to the West Coast after his stint in Wasington, D.C.
While Shireman focused much of his energy on student loan reform, analysts of the proprietary education sector watched him carefully. A frequent critic of for-profit college companies, he was viewed by many as the biggest potential threat to the industry's financial future.
In fact, we reported a few weeks ago that a single speech by Shireman that zeroed in on for-profits caused shares of Apollo Group, DeVry, Corinthian Colleges and others to drop in value.
Now, Bloomberg News reports that Shireman's departure is having the opposite effect:
Apollo, the biggest U.S. for-profit education provider, advanced 9.9 percent to $57.98 as of 3:55 p.m. in New York. Corinthian Colleges Inc. rallied 14 percent to $16.03. Career Education Corp. jumped 8.7 percent to $31.35 and DeVry Inc. gained 4.9 percent to $62.03.
Shireman was seen as the man behind new proposed "gainful employment" regulations that would deny federal aid to for-profit programs whose graduates ended up with high debt loads and low salaries. Under early proposals released in January, loan payments could not exceed 8 percent of a graduate's expected earnings.
The education blog Quick and the Ed posted the following snapshot of the rally in the for-profit industry's stocks, with the headline: "A Picture is Worth a Thousand Words."
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