The for-profit company, Corinthian Colleges Inc (NASDAQ:COCO) has announced that they are going to sell 85 of its career-education campuses nationwide and shutter a dozen. This huge development in the education sector has rattled the education stocks. Discussing this major selling decision by Corinthian Colleges Inc (NASDAQ:COCO) in a program, CNBC contributor, Herb Greenberg, said that that this is a huge setback for Corinthian Colleges Inc (NASDAQ:COCO) and Corinthian Colleges had to take this step because of the strict policies by the government for colleges that are not sticking to rules and regulations. He also said that the other companies will take benefit from this sell off.
“The next are really two companies, its ITT Educational Services, Inc.(NYSE:ESI), which ten years ago was the focus of an FBI raid and somehow slipped through that crack, and then Education Management Corp (NASDAQ:EDMC), and operates a bunch of art schools, art institutes, around the country,” said Greenberg.
He said that job placement is a hard task these days and Education Management Corp (NASDAQ:EDMC) touts that it has 75% job placement rates, which is a really tough task to achieve. This is the reason Education Management Corp (NASDAQ:EDMC) has more chances to grow in future because getting a job is of paramount importance for people perusing their degrees in the schools.
Greenberg said that government is cracking down in the schools and educational entities and pushing them to have certain set standards and meet some deadlines. This could not be achieved by ITT Educational Services, Inc (NYSE:ESI) and this is the sole reason behind this huge sell off by the company.
Answering the question that whether this selling decision by Corinthian Colleges Inc (NASDAQ:COCO) will increase demand for more colleges, Greenberg said that there are fewer chances for that because there are already some good colleges satisfying the needs.
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