Comments on the declines in Education stocks: “Shares of private higher education companies are slumping, after Morgan Stanley suggested that the Senate may not include additional funds for students loans in its version of the stimulus package. The House of Representatives had included funds in its version of the bill that would increase unsubsidized Stafford Loan limits by $2,000 and raise Pell grant limits by $500. Morgan Stanley believes ITT Educational Services (ESI:$112.15,00$-14.06,00-11.14%) , Corinthian Colleges (COCO:$17.12,00$-1.24,00-6.75%) and Career Education (CECO:$20.45,00$-1.21,00-5.59%) are most negatively affected by the news. The firm thinks that the $2,000 increase in Stafford loans would do a great deal to compensate for reduced private lending to students, while eliminating the need for most private education companies to provide their own loans to students. The firm maintains an Overweight rating on Apollo (APOL), DeVry (DV:$60.00,00$-0.87,00-1.43%) , and Capella Education (CPLA:$58.35,00$-0.82,00-1.39%) . Morgan Stanley maintains an Underweight rating on Strayer Education (STRA:$217.30,00$-11.74,00-5.13%) . In late morning trading, IT Educational Services is dropping $16.33, or 12.94% to $109.90, while Corinthian Colleges (COCO:$17.12,00$-1.24,00-6.75%) is slipping 7.95%, or $1.46, to $16.91 and Career Education (CECO:$20.45,00$-1.21,00-5.59%) is slumping $1.43, or 6.60%, to $20.23.”
