NEW YORK (AP) — Shares of for-profit education companies dropped Monday after Senate Democrats issued a report saying for-profit colleges put revenues above education, and charge students tuition and loan rates that could leave them in debt for years.
The staff report issued Monday by Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, said that while students are aggressively recruited by for-profit colleges, they drop out in high numbers without the degree or certificate they were seeking.
The report found that 54 percent of students enrolled in 2008-2009 left without a degree or certificate by mid-2010. When two-year associate degree programs were studied, the finding was that 63 percent left without a degree.
Steve Gunderson, president and CEO of the for-profit colleges' lobbying group Association of Private Sector Colleges and Universities, dismissed the report as inaccurate. He said some of the report's statistics are misleading.
For-profit colleges have been under sharp government scrutiny and pressure for months. Their enrollments soared during the recession as job-seekers tried to improve their credentials. But that trend reversed after the federal government announced it was putting new rules in place aimed at ensuring that students can find jobs and pay off their debt after they graduate.
Under the rules, schools must meet certain performance criteria or risk losing access to federal student loans. Several for-profit education companies have stiffened enrollment guidelines as a result — dampening enrollment and profitability.
Some companies recently reported steep declines in enrollment and net income.
DeVry Inc. shares fell 75 cents, or 3.8 percent, to end Monday at $19.04. DeVry reported last week that its enrollment is expected to decline 15 percent to 17 percent in the summer term compared with last summer, and said its fiscal fourth-quarter results likely will fall far short of market expectations.
Shares of industry leader Apollo Group Inc. lost $1.17, or 4.1 percent, at $27.22. Corinthian Colleges Inc. dipped 13 cents, or 6.4 percent, to $1.89, while Career Education Corp. slid 39 cents, or 7.8 percent, to $4.60.