Lincoln Educational Services Corp. (LINC) on Thursday said it will close five campuses by the end of the year due to a decline in the number of students attending classes at these campuses amid changes in regulations.
Lincoln said that, in addition to the expected operational losses, it expects to log about $12.5 million in additional pre-tax expenses during the second half of 2013 to cease operations at the campuses. The company also said it expects losses for the year, attributable to the five campuses, of between 60 cents a share and 65 cents a share.
"Federal legislation implemented on July 1, 2012, that prohibits Ability-to-Benefit students from participating in federal student financial-aid programs has led to a dramatic decrease in the number of students attending these five campuses," Lincoln's Chief Executive Shaun McAlmont said. "We assessed the productivity and potential for each of these campuses during this challenging economic period and made the difficult decision that they were no longer sustainable."
Lincoln said it will close four campuses in Ohio and one in Kentucky and has stopped admitting students to them, effective immediately. Still, the post-secondary education company said it will give current students who are scheduled to graduate before Dec. 31 the opportunity to complete their course of study at Lincoln.
For fiscal 2013, the campuses were expected to contribute about $24 million in revenue and 1,800 student starts.
According to StudentAdvisor.com, one of the criteria used to establish student eligibility in order to receive Title IV program assistance is that a student must have earned a high-school diploma or its equivalent. Students who aren't high school graduates–or who haven't earned a General Education Development Certificate–can demonstrate that they have the ability to benefit from the education or training being offered by passing an approved ability-to-benefit test.
In May, Lincoln said its first-quarter loss widened sharply as revenue dropped. At the time, the company also offered a view for the second quarter well below Wall Street views, saying it expects a reduction in starts in the second quarter as a result of the continued loss of ability-to-benefit students and Lincoln's elimination of its fully online program in the first half of 2012.
Shares of Lincoln closed Wednesday at $6.75 and were inactive premarket. The stock has risen 11% in the past 12 months.