“Stocks, I think no matter the industry, do not respond well to uncertainty and the announcement alleviated lifted most of that uncertainty,” Magda said. “I think the stocks rallied because the cloud of uncertainty was lifted with the announcement.”
The for-profit college stock market rally, Nassirian said, indicates just how lenient ED’s regulations had become after intensive lobbying on Capitol Hill.
“That tells you the enormity of what happened,” he said. “It clearly indicates that people with real money at stake are betting that the industry’s practices will go on unchecked.”
Nassirian said ED officials should have been better prepared to withstand the massive, two-year lobbying campaign unleashed by the for-profit industry after Duncan and President Obama first said they would push for tighter controls on federal dollars going to for-profit colleges.
“This is like taking on the mob,” he said. “Be prepared for a backlash that defies imagination.”