Education Stocks: Student Loan Interest Rates To Double

Education Stocks: Student Loan Interest Rates To Double

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Student loan interest rates for more than 7.4 million students across the country will double if congress doesn’t act fast. According to Bloomberg the senate, requiring a 60-member vote, didn’t advance the plan to avert a July 1 increase in college-loan interest rates to 6.8% from 3.4%.  However, Republicans were holding out for want of an alternative way to cover the $6 billion cost of the extension.

Student-owed debt has been escalating out of control: Federal loans for students have reached historical totals with over a trillion dollars owed. It correlates well with the statistic that tuition fees have increased around 400% since 1982. Worse, Investment News reports the student loan default rate is on the rise, up nearly 9% for the two-year period ending in 2010.

In the end it will be the unity of Republicans and Democrats to find a solution to the issue on interest rates. Quoted from reporters, Senator Jack Reed, D-R.I., stated, “both parties have to work together to find a fair and rational way of keeping the student loan interest rate in check.”

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Many for-profit institutions rely on these loans in order for students to afford, or simply to pay up, tuition. Is there a better way to provide services to students on loans? See below to compare educational institutions. How can they provide a more sustainable future for students without the risk of drowning in debt?

List sorted by market cap.

Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:

“1. Apollo Group Inc. (APOL, Earnings, Analysts, Financials): Provides educational programs and services at the undergraduate, master's, and doctoral levels. Market cap at $4.07B, most recent closing price at $33.72. Levered free cash flow at $659.83M vs. enterprise value at $3.41B (implies a LFCF/EV ratio at 19.35%).

 

“2. ITT Educational Services Inc. (ESI, Earnings, Analysts, Financials): Offers postsecondary-degree programs in the U.S. that provide diplomas as well as associate's, bachelor's, and master's degrees. Market cap at $1.51B, most recent closing price at $61.94. Levered free cash flow at $215.13M vs. enterprise value at $1.40B (implies a LFCF/EV ratio at 15.37%).

 

“3. Bridgepoint Education, Inc. (BPI, Earnings, Analysts, Financials): Provides postsecondary education services. Market cap at $1.07B, most recent closing price at $20.15. Levered free cash flow at $130.91M vs. enterprise value at $745.79M (implies a LFCF/EV ratio at 17.55%).

 

“4. Capella Education Co. (CPLA, Earnings, Analysts, Financials): Provides online postsecondary education services in the United States. Market cap at $407.26M, most recent closing price at $30.19. Levered free cash flow at $45.82M vs. enterprise value at $276.11M (implies a LFCF/EV ratio at 16.59%).

 

“5. Universal Technical Institute, Inc. (UTI, Earnings, Analysts, Financials): Provides postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle, and marine technicians in the United States. Market cap at $301.54M, most recent closing price at $12.17. Levered free cash flow at $30.88M vs. enterprise value at $188.70M (implies a LFCF/EV ratio at 16.36%).

 

 

(Written by Kelly Haugen)

 

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4 Responses to “Education Stocks: Student Loan Interest Rates To Double”

  1. meveric says:

    Hi Guys,
    Can someone PLEASE HELP AND advise me on this:
    http://www.indiegogo.com/projects/first-education

    I would like to invest but dont know if it is a god idea, what do you recommend?

  2. Daina says:

    When your business need a quick growth in market, Social media always plays an excellent role to get it in top within a short investment. You can read best knowledge http://www.globalwritings.com/ to learn more.

  3. Jull_S says:

    Finally it happened and we can see the gradual increase of interest rates for students, I am sure young people nowadays should be even more motivated to find alternative options of their education financing. I also ask a question to myself – the overall credit card debt is several times less than overall student debt in the country and the interest rates are also less. Is it really worth it to apply for a student loan or may be there is an option to finance education through credit card or other personal lending options. At least you'll be able to file bankruptcy later on.

  4. Efrain Jefferson says:

    In many countries there are many companies which provide loans to their students for studies. This is bad news that banks double the interest rate. Now students take more tens to pay the double and it can affect their assignment help in adelaide http://au-assignment-help.com/ advice and government should take a notice on it.

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