On Jan 17, 2013, DeVry Education Group Inc. (NYSE:DV) reached a 52-week high of $39.94, soon after President Obama expanded federal support to help more students afford a college education. DeVry currently carries a Zacks Rank #3 (Hold).
Share Price Drivers
The President has committed to devise an effective system to help low-income students afford college education. This is in keeping with his goal to help America generate the highest proportion of college graduates in the world by 2020.
President Obama has taken a number of steps to provide the tools, access and opportunity to pursue higher education to low-income students.
The President has doubled the Federal investments in Pell Grants, a federal student financial aid that is usually awarded to undergraduate students. The President raised the maximum Pell Grant award amount to $5,635 for the 2013-14 award year — a $905 increase since 2008.
Moreover, the President announced reforms to student loans to help students manage the loans in a better way. Beginning the end of this year, students will be given an option to cap repayment of student loans at 10% of their monthly income. This is aimed to reduce the burden of student loans.
In addition, President Obama has succeeded in keeping interest rates on Federal student loans low for this school year.
More than 100 colleges and 40 organizations have joined the cause to help more people graduate from college.
The administration’s campaign to encourage low-income students to attend college comes as a boon to post-secondary education providers like DeVry, Strayer Education Inc. (NASD:STRA), Apollo Education Group, Inc. (NASD:APOL), American Public Education, Inc. (NASD:APEI) and many more. Most higher education colleges have witnessed a sharp decline in enrollments in the past few quarters due to weakness across the entire higher education system in the United States.
A weak macroeconomic environment has led to a subsequent decline in student demand due to the hesitancy over taking a loan. Students are generally apprehensive about the value of pursuing a degree and lack confidence in the job market. President Obama’s support for higher education is expected to improve enrollment trends for these education companies; thereby boosting revenues and profits.