Atlanta, GA 7/2/12 (StreetBeat) -- A federal judge ruled on Saturday that the Education Department failed to adequately justify its rule demanding that 35% of students at for-profit colleges be paying back their loans.
Judge Rudolph Contreras said the government hadn’t presented evidence showing that 35% was the appropriate rate for the department to choose, Bloomberg reported.
The decision means that the rule, meant to keep companies from taking federal cash while failing to prepare students for the job market, will have to be rewritten.
For-profit education stocks, which have fallen on increased regulation by the federal government, got a boost from the ruling. This morning some of the stocks are trading higher. Corinthian Colleges (COCO), which has lagged other schools on some Education Department metrics, was up 12%; Apollo Group (APOL) was up 2.1%. Others, however, were showing some weakness. Devry (DV) fell 0.5%. (Presumably, schools that were meeting loan-payback requirements would have been helped as weaker companies were weeded out.)
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