Student Loan - Loans and Debt Consolidation

STRAYER LEADS EDUCATION STOCKS DOWN AS SENATOR PROPOSES CURBS ON PRACTICES BLOOMBERG

Strayer Leads Education Stocks Down as Senator Proposes Curbs on Practices

By Nikolaj Gammeltoft and John McCormick -

Strayer Education Inc. led a decline in for-profit U.S. education stocks as Senator Dick Durbin said industry practices should be curbed.

We need to consider whether it is wise for companies to profit so handsomely on federal funding when the results don t match the investment, Durbin, a Democrat from Illinois, said in a statement. And we need congressional action to rein in abuses and ensure that taxpayer dollars are being wisely spent.

Yesterday, hedge-fund manager Steven Eisman said he is betting against Strayer, saying its federal student loan repayment rate is 25 percent, less than half the 55.4 percent figure given by the company.

Strayer, based in Arlington, Virginia, retreated 9.1 percent to $144.64 at 4 p.m. New York time. An index of 12 education stocks fell 3.2 percent, the most since Aug. 16, after Durbin discussed the industry with students and executives in Chicago. Corinthian Colleges Inc. lost 7.6 percent to $4.88.

It s Strayer pulling the sector down, said Trace Urdan, an analyst with Signal Hill Capital in San Francisco. People are alarmed because of Eisman, they are alarmed about the suggestion that Strayer isn t the company we thought it was.

Bear the Risk

Congress won t pass legislation to regulate the industry this year while there may be more hearings, Durbin said in a press confere...[more]