(Written by Andy Medici, Washington Business Journal) Since the stock market opened Wednesday morning after Trump’s election, the Dow Jones Industrial Average has grown about 2.6 percent. The area’s for-profit education companies are doing much better.
- Online learning company K12 Inc. (NYSE: LRN) saw its stock shoot up almost 23 percent, from $11.06 Wednesday morning to $13.60 on Friday.
- Strayer Inc. (NASDAQ: STRA), which runs a chain of for-profit universities, jumped 18 percent, from $57.88 to $68.36 on Friday.
- Graham Holdings Co. (NYSE: GHC), which owns Kaplan’s education and test prep services, grew 5 percent, from $446.95 per share to $471.40.
“This election, the outcome both at the federal level and at the statehouses, was very positive for school choice,” said K12 Inc. CEO Stuart Udell. “In the long term we are in a much more positive environment than before.”
President-elect Donald Trump has repeatedly spoken of his support for school choice, with a pledge to allow federal funding to go to schools — or online companies, like K12 — where students opt to attend. He also has vowed to curb regulations on for-profit education companies.
The Education Department under the Obama administration has vigorously regulated for-profit schools, issuing graduation and employment measures they must meet to receive federal funding. On Sept. 6 ITT Technical Institute abruptly ceased operations and closed dozens of campuses after being hit with a series of sanctions by the department.
Those regulations have a substantial cost. While they are not broken out separately in Graham Holding’s financials, the Arlington company took a $143.9 million goodwill impairment charge based in part on what it saw as the possible impact of new regulations amid a challenging industry environment.
Frederick Hess, scholar and director of education policy studies at the American Enterprise Institute, said it’s hard to call Trump the poster child for for-profit education, given the fact that his own “Trump University” program was sued by the New York Attorney General in 2010 in a suit going to trial Nov. 28. But Hess said for-profit schools can look forward to a much better regulatory environment.
“It will be night and day,” Hess said. “I think for-profit institutions can be expected to be treated more fairly.”
Regulations under the Obama administration served to depress the value of for-profit education companies in the stock market and made it harder to attract students, he said.
Udell said for his company, the election of Trump and Vice President-elect Mike Pence and the host of business friendly politicians elected across the country, means people will have greater say about what schools their children attend. K12 has spent $65 million over the last year to build new offerings and programs, such as technical training for high school students.
Udell said companies like his will have a chance to grow to new markets and expand their existing services. For K12, that could mean growth into a state like Missouri (where the company hasn’t been before), and further expansion in existing states like Indiana.
“Things can only look up for businesses like ours in the space right now,” Udell said.
Andy Medici covers money, the economy, demographics, housing and financial services.