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Stocks of for-profit colleges, which have been hit hard of late, are soaring today on rumors that the Department of Education won't be as restrictive on student aid eligibility as earlier expected. Analyst Trace Urdan of Signal Hill predicted that the DOE would not be as harsh as anticipated. Apparently, speculators shorting the stocks (betting they would go down) rushed to cover their shorts by buying shares. Half an hour before today's (July 19) close, San Diego's Bridgepoint Education is up 8.6% to $17.05; Apollo Group (University of Phoenix) is up 5.29%, Corinthian Colleges up 8.71% and Education Management up 11.55%. Bridgepoint students get about 85% of their financing from federal programs. Bridgepoint is also under DOE investigation for alleged dubious sales practices.

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Comments

a2zresource July 19, 2010 @ 1:21 p.m.

Either the bounce is merely speculative or there are investors that see these traded firms as good buys now.

I think it's merely speculative. Even with looser student loan standards, those schools will have to also loosen graduation standards or face scrutiny on high failure rates before graduation. Looser grad standards mean that the degrees may potentially devalue themselves into being unacceptable for relatively mundane employment (assuming they are all that great in the first place) as nobody is going to UPhoenix or Bridgepoint to be appointed or even considered as, let's say, a UCSD biochemistry professor.

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Don Bauder July 19, 2010 @ 4:08 p.m.

Response to post #1: These stocks have been very volatile, often moved violently in one direction or another by rumors. Best, Don Bauder

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SurfPuppy619 July 19, 2010 @ 5:04 p.m.

Anyone that invests in for profit education and relies on gov loans is a nutcase.

The entire scam is going to crash in spectacular flames, just a matter of time.....sort of like our city and national debt-just a matter of time

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Don Bauder July 19, 2010 @ 5:42 p.m.

Response to post #3: You are probably right about a crash of this industry and these stocks, but speculators only worry about the next two minutes. These stocks are not for investors. Best, Don Bauder

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