Wall Street probably expected worse

The United States Department of Education today (October 30) is coming out with stricter regulations that will hit for-profit colleges. Beginning July 1 of next year, for-profit colleges will be at risk of losing federal aid if a typical graduate's annual loan repayments are more than 8 percent of his or her earnings. For-profit students are 11 percent of the total in American schools but represent at least 44 percent of loan defaults. The for-profits generally get about 80 percent of their revenue from federal sources such as Pell grants.

The 8 percent threshold is lower than the current 12 percent level, according to Reuters. Predictably, Wall Street is rejoicing. At 10:30 a.m. Pacific Time, the stock of the largest for-profit, Apollo Group (which includes the University of Phoenix) is up 3.78 percent; DeVry Educational Group is up 1.94 percent and San Diego's Bridgepoint Education is up 1.37 percent.