Career Education profit rises on higher enrollment

Career Education Corp., the for- profit college that operates about 90 campuses in the U.S. and Europe, said quarterly profit gained 26 percent. New student enrollment rose 6 percent to 40,000, the company said.

Third-quarter net income rose to $26.1 million, or 33 cents a share, from $20.8 million, or 25 cents a share, in the period a year earlier, Hoffman Estates-based Career Education said today in a statement. Revenue rose 14 percent to $524.2 million.

For-profit colleges have been predicting slower enrollment growth as the Obama administration prepares to enforce recruitment regulations in July. Apollo Group Inc., the biggest U.S. education company, withdrew its annual forecast Oct. 13 and said new enrollment will fall this quarter, partly because of the regulatory changes.

“The real question is, what's the magnitude of the challenges the sector is seeing?” Ariel Sokol, a UBS AG analyst in New York,” said in a telephone interview before the results were released. “It remains to be seen what the impact of this environment will be in the quarters to come.”

Career Education gained 45 cents or 2.5 percent to close at $18.40 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The shares have lost 13 percent in 12 months.

Analysts' Estimates

Excluding some items, the company earned 66 cents a share, beating the 64 cents average estimate of 13 analysts surveyed by Bloomberg.

The administration formally published rules last week that will ban for-profit colleges from paying recruiters on the basis of the number students signed up for classes. The practice, called incentive compensation, has been linked to pressure tactics by enrollment counselors, according to the Institute for College Access & Success, an Oakland, California-based education advocacy group.

Corinthian Colleges Inc., which operates more than 100 schools in the U.S. and Canada, said today that its toughened admissions standards have hurt new student enrollment. Bridgepoint Education Inc., a for-profit college that first sold shares last year, said quarterly new enrollments climbed 23 percent to about 24,000 students.

For-profit college officials will go to Washington Nov. 4-5 to comment on a proposed Education Department rule that would link programs' eligibility for student aid to their graduates' incomes and loan-repayment rates. The administration delayed publication of the proposal, called “gainful employment,” after the department received a record 90,000 comment letters, many from for-profit college students, teachers and staff.