Donald Trump hasn't announced his choice to lead the Department of Education yet, but for-profit education stocks have been in a celebratory mood ever since the U.S. election.
The new administration is expected to have a lighter touch with regulations and restrictions on the for-profit sector, an industry the President-elect himself is familiar with after settling a lawsuit filed against Trump University for $25M. There's been some speculation that the DOE will see a major transition over the next four years.
Education stocks rising more than 20% since the election include Strayer Education (NASDAQ:STRA), Universal Technical Institute (NYSE:UTI), Capella Education (NASDAQ:CPLA), Bridgepoint Education (NYSE:BPI), Career Education Corp. (NASDAQ:CECO), Grand Canyon Education (NASDAQ:LOPE), DeVry Education (NYSE:DV) and Chegg (NYSE:CHGG). Many of those names are now at or near their 52-week highs which brings up the question of how far the rally can extend?
The for-profit education sector had a stellar day after the GOP sweep eased some of the regulatory concerns hanging over the sector.
The Obama administration has targeted several firms for their marketing practices.
Gainers after the Trump victory include American Public Education (NASDAQ:APEI) +21%, Career Education (NASDAQ:CECO) +18%, Bridgepoint Education (NYSE:BPI) +16%, Strayer Education (NASDAQ:STRA) +12%, Grand Canyon Education (NASDAQ:LOPE) +10%, K12 (NYSE:LRN) +9%, DeVry (NYSE:DV) +8%.
Bridgepoint Education (BPI -1.4%) is seeing some volatile trading after the Consumer Financial Protection Bureau takes action against the company in an administrative court filing. Shares have been down as much as 10% and have been halted twice.
CPFB filing: "The Bureau is ordering Bridgepoint to discharge all outstanding private loans the institution made to its students and to refund loan payments already made by borrowers."
More than 40% of the roughly 22M Americans who borrowed from the government's main student-loan program aren't making payments or are behind on more than $200B owed, according to a quarterly snapshot of the Education Department's $1.2T student-loan portfolio.
The Obama administration maintains that the loan program, as a whole, will generate a profit over the long term, but the risk is rising that millions of students may never repay and revenue won't meet projections.