For-Profit Colleges Look to Donald Trump for a Pass

For-profit colleges are looking with relief to the incoming Trump administration, banking on a rollback of tough regulations that threatened to lead to the closure of hundreds of schools and that drove their stock-market valuations down sharply. Investors, in turn, have poured hundreds of millions of dollars into education stocks since the election, hopeful that a change of regime would spur a resurgence in the for-profit college sector. Shares in two of the biggest education companies by market value— DeVry Education Group Inc. and Strayer Education Inc.—have climbed more than 25% in price since Nov. 8. Bridgepoint Education Inc.’s shares have soared 43%, while Grand Canyon Education Inc.’s have risen 20%. The for-profit higher-education industry enjoyed its heyday during the early 2000s, often targeting Americans neglected by traditional colleges: the unemployed, poor people, minorities, older workers and single mothers. But a spate of recruiting scandals, a regulatory crackdown by the Obama administration and a broad decline in college enrollment across the U.S. because of a stronger jobs market have crushed the industry. Now, investors are betting a business-friendly Trump administration and a Republican-controlled Congress will take a largely hands-off approach to the industry. “It’s fair to think that you’re going to have a more benign enforcement regime, certainly with respect to consumer protections,” Credit Suisse analyst Trace Urdan said. President-elect Donald Trump hasn’t said how his administration would treat for-profit colleges, but he pledged during his campaign to broadly remove federal regulations that he said were driving up college costs. He once owned a for-profit school, the now-defunct Trump University. Mr. Trump’s pick for education secretary, Michigan billionaire Betsy DeVos, has pushed for expanding private-sector options in primary and secondary education through vouchers and charter schools, which are publicly funded but mostly privately run. Meanwhile, congressional Republicans such as Sen. Lamar Alexander of Tennessee, who heads the committee overseeing education, have criticized the Obama administration’s treatment of for-profit schools, including so-called gainful employment regulations, as government overreach. An aide to Sen. Alexander said he hopes Mr. Trump would find a way to undo the rules. Sen. John McCain (R.,...

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