Deutsche Bank's Thoughts on Gainful Employment and For-Profit Education Stocks (ESI, EDMC, CECO)

Deutsche Bank is out with a research note this morning, where it reviews the Department of Education's hearing on Gainful Employment (

). The analysts said that, despite expectations, Thursday and Friday's public hearings on Gainful Employment (

) did not involve any exchange between DoE officials and speakers. The purpose of the hearings, as confirmed by a DoE official, was to not exclude anyone from the discussion on GE, and reinforces the relative unimportance of the hearings vs. the DoE's private meetings. The analysts remarked that one of the most often raised issues about GE was its retroactive nature; many feel that introducing a rule that holds schools responsible for past student cohorts is unconstitutional. If the DoE accepts this argument, it would have to delay implementation three years to 7/1/2015 or change the look back period for the repayment rate. The analyst said, “While most of the public For Profits participated in private meetings with the DoE, a handful of schools also had representatives speak at the hearing including ITT Educational Services, Inc.

, Education Management Corporation

, and Career Education Corporation

[via] Le Cordon Bleu.”