For-Profits win major concession on "gainful employment" rule

Interesting development in the new Dept. of Ed. regulations due out today.


For-Profit Colleges Win Major Concessions in Final 'Gainful Employment' Rule - Government - The Chronicle of Higher Education

 

Interesting read.

 

I'm all for reducing government handouts but why stop at for profits only? Plenty of community colleges and universities waste taxpayer money also. These universities charge low tuition because it is subsidized by state and federal funds. Hopefully these same institutions are held accountable for student incomes post-graduation. I would also like to see kids who receive federal grants report their income after graduating so that the taxpayers' investments in these underserved individuals can be monitored and adjusted if the outcome is not worth the investment.

 

True. Students at community colleges and state universities are subsidized by tax funds at a much higher rate than students at for-profit colleges and universities.

Community colleges and state universities are not held accountable for what their graduates dd. The "gainful employment" rules are designed to single out only one specific sector of higher education (for-profit).

That would be nice.

 

Due to that favorable news release, I made 29k in one day -- today!

State universities and community colleges are also supported primarily by the government, but not by title IV. If the government were to withdraw it's support, then the public university system would go out of business. Similarly, if title IV were withdrawn, then some for-profits would go out of business and many others would be pared down.

It's all supported by the government, but only the for-profits are being singled out for various reasons.

Here are my credentials:

AA community college
BS private non-profit university
MA state university
DBA for-profit
MPA for-profit (in-progress)

As you can see, I believe in for-profits enough to get degrees from them, as well as investing in them. The rigor is equivalent amongst for-profits and non-profits. It's all the same (basically). I've experienced both.

 

You made 29k from investing in for-profit education stocks?

 

Which stocks reacted so positively?

 

Yes, but the same can be done and is done in other stocks too, such as Coke, GE, Cisco, et al. Let's not demonize for-profits simply because some investors know how to take advantage of swings in stock prices. Each stock must be explored individually. I probably should not have discosed financial numbers because it may distract from the original topic. Mind you-- stocks are risky and you can also lose the shirt off your back. I do NOT recommend that my friends do their own investing in stocks.

 

I'll post a link here on Monday. I have to rush off and leave town at the moment.

 

All education stocks did. Here are the gains at the close of yesterday (June 3, 2011)

 

Close, but not exactly right, it is worse than you present.

The public not-for-profits, the generic state schools, community colleges, and so on are absolutely funded through Title IV, as much or more given their tuition than the for-profits or private non-profits. They are also matched through state taxes, and receive a lot of federal grants as well as donations.

While there are many for-profits that earn up to 90% of their income from Title IV, that 90% is what I call the front of the model. Say a for-profit makes $100 through FSA. A public state school has the same 90% rule (at the CC I teach at I couldn't find the 1 in 10 that isn't using FSA, although I know they must be there) and would take that same $100 for the student, be matched another $100 from the state taxpayers, and would also receive roughly another $50 from other public sources for the student (grants, donations, sports, so on). I call those last two revenue streams the back of the model, because they are pretty much invisible yet demonstrate an excessive and irresponsible financial model.

This is just what I could discover analyzing both for-profit and not-for-profit public and private balance sheets. I’m no forensic accountant, so I can’t value the other elements that the public non-profits receive, like free rent, free land, public funded improvements like new buildings and infrastructure, free marketing, and so on. All in all for every $100 that a for-profit might make from public money, the public non-profits probably average $400 to $500, or much more.

Additionally, at the for-profits the faculty have to really earn their pay, teaching 15 or so hours. At the large public non-profits a full professor MAY teach 6 hours, or more like 3 if they publish regularly, yet the for-profit faculty is paid around $65k and the non-profit faculty is paid around $100k for about 25% of comparable work.

 

I've been saying this was going to happen. What was it someone told me about a month or so ago? "Good luck with that" or something? Well I have an answer to that... $kaching$ baby. It's worth noting however I did not make $29K though...good God me again...you must be rolling in it.

 

If only I could go back in time and buy apple stock when it was priced in the single digits, especially when it was priced at just over 4 dollars a share in the late 90s. Great trade me again. Sure you didn't get a tip from somewhere Gekko? Bluestar loves education stocks. :biggrin:

 

Correction. Blue horseshoe not bluestar. If anyone is interested, here is a listing of education stocks. Education Stocks Index (*GRADE) at tickerspy.com

 

Thanks for posting the link.

I bought COCO at 4.38 and at 4 and then it went down to 3.85 when the Department of Education said that it was going to release it's new rules for title IV, in conjunction with three states announcing that they were suing COCO. The pundits said that COCO might not even be in existence in five more years. Then the new (good) rules about for-profits was released, which caused COCO to spike up to 5.61. I sold at 5.47. It is God's grace!

 

That was me. Congrats on your call. Enjoy your windfall.