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Education Department Holds Rare Conference Call With For-Profit Analysts and Investors
By admin | May 29, 2009
Education Department Holds Rare Conference Call With For-Profit Analysts and Investors
Washington — Aiming to calm a jittery for-profit sector, the Education Department took the unusual step today of briefing investors and analysts about its regulatory plans.
In a conference call with investment analysts and reporters, department officials described their plans to issue new rules governing incentive compensation and job-placement rates, among other topics.
Proprietary colleges have been on edge since President Obama took office, fearing that the new administration would ramp up government oversight of the for-profit sector. Their fears deepened on Tuesday, when the Education Department announced that it would take a “fresh look” at federal restrictions on the bonuses paid to individuals or organizations for meeting recruitment or admissions goals, and might require for-profit and technical colleges to provide more evidence that they are preparing their students for the work force.
Since then, the department has been inundated with calls from for-profit analysts, said Robert M. Shireman, deputy under secretary of education.
“I generally try to avoid talking to analysts, but it was becoming clear that there was some interest in an explanation of the Federal Register notice,” he said, referring to the announcement of rule making.
“Some interest” may be an understatement. In all, 657 callers clogged the lines to hear the department’s explanation. Analysts said it was rare for the department to hold a briefing specifically for them.
Whether the sector was reassured by Mr. Shireman’s remarks remains to be seen. While the deputy under secretary didn’t attack for-profit colleges, he didn’t exactly praise them either. Asked if the for-profit sector “provides a useful service” that nonprofit colleges don’t provide, he was noncommittal.
“There are effective schoools and less-effective schools in every sector, so our focus needs to be on quality regardless of sector,” he said.
Trace A. Urdan, an analyst for the investment-research firm Signal Hill, who had asked the question, described Mr. Shireman’s response as a “Rorschach test.”
“If you believe the fears are overblown, then you read this as saying they’re not targeting for-profits,” he said. “If you’re otherwise inclined, you could read it as more negative than positive.”
Stocks for the for-profit sector fell on Tuesday, after the department announced the rule making, but rose slightly this morning, on expectations that the call might allay the sector’s fears. —Kelly Field
Topics: Education |