Skip to main content

Market Overview

Compass Point: Congress Unlikely To Pay For Free Community College Initiative

Share:

President Barack Obama and the White House announced on Thursday it will propose a program that would make two years of community college free for qualifying students.

Issac Boltansky of Compass Point commented in a note on Friday that Congress is required to approve the initiative, an event that is unlikely to happen.

“We doubt that lawmakers will oppose this proposal on principle,” Boltansky wrote. “Rather, our sense is that this proposal faces a steep climb to passage because the White House is unlikely to propose a budgetary offset that Congressional Republicans will find acceptable.”

The analyst adds, “While we expect the community college proposal to drive a fair amount of headlines in the days ahead, we simply do not believe there is the ideological leeway or legislative capacity necessary for Congressional passage.”

Boltansky notes that in the event that this proposal is enacted, it will be considered as a negative for the for-profit schools as it would weaken demand as potential students migrate to community colleges.

Higher One Holdings, Inc (NYSE: ONE) will see a negative impact given that a significant portion of its tuition refund business comes from community colleges. Performant Financial Corp (NASDAQ: PFMT) will see a “slight negative” impact as lower loan levels would result in lower default rates.

NelNet, Inc. (NYSE: NNI) along with Navient Corp (NASDAQ: NAVI) will see “little direct impact” as DL servicing comprises a small percentage of earnings.

Finally, SLM Corp (NYSE: SLM) will also see “little direct impact” as community college students typically don't take out private student loans.

Latest Ratings for ONE

DateFirmActionFromTo
Nov 2020Morgan StanleyDowngradesOverweightEqual-Weight
Feb 2020Morgan StanleyUpgradesEqual-WeightOverweight
Jun 2018Morgan StanleyDowngradesOverweightEqual-Weight

View More Analyst Ratings for ONE
View the Latest Analyst Ratings

 

Related Articles (ONE)

View Comments and Join the Discussion!

Posted-In: Community College Compass Point Research Congress For Profit Schools Issac BoltanskyAnalyst Color News Analyst Ratings

Latest Ratings

StockFirmActionPT
FSRMorgan StanleyMaintains40.0
NATJefferiesMaintains2.8
MEDDA DavidsonMaintains302.0
VICRBWS FinancialMaintains120.0
PSXMizuhoMaintains96.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com