Senate Seeks More Information from Education Cos

At least nine publicly traded for-profit education companies said on Friday a U.S. Senate committee has asked for more information from them regarding their recruitment practices and use of financial aid for students.

Apollo Group (APOL.O), Career Education (CECO.O), Capella Education (CPLA.O), DeVry (DV.N) and ITT Educational Services (ESI.N) received requests for information from the U.S. Senate's education panel, the companies said on Friday.

Brightpoint Education (BPI.N), National American University Holdings (NAUH.O), American Public Education (APEI.O) and Universal Technical Institute (UTI.N) also received these notices.

About 30 education institutions in the United States are being asked to reveal information and documents on how they use federal aid meant for students, enrollment practices, debt levels of students and how the companies track students who risk defaults.

The companies are also being asked to reveal details on their financial results, staff, regulatory compliance and other matters regarding their business.

The Senate committee has asked the companies to submit some of the specified information by Aug. 26, and the rest by Sept. 16.

The notices follow the Senate panel's ongoing hearings on for-profit colleges receiving federal aid for students.

Earlier this week, the panel's chairman Tom Harkin called for stronger steps by lawmakers after government investigators uncovered deceptive practices aimed at enticing prospective students.

Harkin told a congressional hearing he anticipates "really tightly designed legislation to correct these practices" by the end of this year and into 2011 and plans to hold more hearings on the industry starting in September.

The for-profit education sector is also being plagued by the proposed gainful employment regulation, which aims to ensure that students do not graduate with an unwieldy debt burden.

The S&P 1500 education services sub-industry index .15GSPEDUS, which has shed about 12 percent of its value in the last two weeks in the wake of increased regulatory scrutiny, closed down 5 percent on Friday.

BMO Capital Markets downgraded the postsecondary education sector to "market perform" from "outperform," citing increased regulatory uncertainty, and said an improving economy will likely lead to slower enrollment growth.

REUTERS