Student Debt Demographics: Is For-Profit Education A Vulnerable Industry?

If asked to guess what age demographic is piling on the most student debt in the US, you’ll probably be wrong. It’s middle-aged borrowers, those between 35 and 49, that are taking on student debt faster than any other age group.

Reuters reports a new analysis by CreditKarma that tracks credit scores. It found the age group’s student debt burden increased “by a staggering” 47%.

“The average student loan debt for those aged 38 to 41 was the biggest of that group — about $ 12,000, up from just under $ 9,000 in 2009. Young people still carry the biggest student loan burdens; those aged 26 to 29 have an average of $ 14,000 in student debt. But the increased levels in middle-aged student debt is a new phenomenon.”

Outstanding student loan are estimated around $ 966 billion, which is more than the total credit card debt in the US.

Mid-Career Training

Credit Karma CEO Kenneth Lin tells Reuters more and more people are going back to school for mid-career training.

Lin says “high unemployment, rising tuition costs, artificially low interest rates from the government, and increased for-profit school advertising… (adds up to) consumers taking on student loan debt at an alarming pace.”

Business Section: Investing Ideas

Without the means to pay debts off, an increasing number of Americans are defaulting on their student loans. That’s bad news for schools mostly populated by students that use federal student loans to pay the tuition fees.

For that reason, we wanted to find list US education stocks whose performance could be impacted by the trend.

Interactive Chart: Press “Play” to compare changes in market cap for all the stocks mentioned below.

Here are the ten largest, sorted by market cap.

1. Apollo Group Inc. (APOL, Earnings, Analysts, Financials): Provides educational programs and services at the undergraduate, master’s, and doctoral levels. Market cap of $ 6.95B. The stock is a short squeeze candidate, with a short float at 8.87% (equivalent to 5.5 days of average volume). The stock has had a good month, gaining 16.24%.

2. Education Management Corporation (EDMC, Earnings, Analysts, Financials): Provides post-secondary education in North America. Market cap of $ 3.76B. Exhibiting strong upside momentum–currently trading 19.77% above its SMA20, 31.03% above its SMA50, and 39.09% above its SMA200. The stock has had a couple of great days, gaining 16.98% over the last week.

3. The Washington Post Company (WPO, Earnings, Analysts, Financials): Operates as a diversified education and media company in the United States and internationally. Market cap of $ 2.87B. The stock is a short squeeze candidate, with a short float at 9.85% (equivalent to 18.19 days of average volume). The stock has lost 13.45% over the last year.

4. DeVry, Inc. (DV, Earnings, Analysts, Financials): Provides educational services worldwide. Market cap of $ 2.56B. Might be undervalued at current levels, with a PEG ratio at 0.85, and P/FCF ratio at 10.89. The stock has had a couple of great days, gaining 7.81% over the last week.

5. 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 of $ 1.52B. The stock is a short squeeze candidate, with a short float at 40.63% (equivalent to 20.19 days of average volume). The stock has had a couple of great days, gaining 10.37% over the last week.

6. Bridgepoint Education, Inc. (BPI, Earnings, Analysts, Financials): Provides postsecondary education services. Market cap of $ 1.19B. The stock is a short squeeze candidate, with a short float at 21.16% (equivalent to 28.92 days of average volume). The stock has gained 20.48% over the last year.

7. Strayer Education Inc. (STRA, Earnings, Analysts, Financials): Provides various academic programs through traditional classrooms and Internet. Market cap of $ 1.16B. The stock is a short squeeze candidate, with a short float at 24.54% (equivalent to 15.87 days of average volume). The stock has lost 35.64% over the last year.

8. Grand Canyon Education, Inc. (LOPE, Earnings, Analysts, Financials): Provides postsecondary education services in the United States. Market cap of $ 697.31M. The stock has lost 16.33% over the last year.

9. K12, Inc. (LRN, Earnings, Analysts, Financials): Provides proprietary curriculum and educational services for online delivery to students in kindergarten through 12th grade (K12) primarily in the United States. Market cap of $ 642.70M. The stock is a short squeeze candidate, with a short float at 18.13% (equivalent to 10.27 days of average volume). It’s been a rough couple of days for the stock, losing 8.05% over the last week.

10. Career Education Corp. (CECO, Earnings, Analysts, Financials): Provides educational services primarily in the United States. Market cap of $ 571.15M. The stock has had a couple of great days, gaining 19.15% over the last week.

(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Data sourced from Finviz.)

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Analyze These Ideas: Getting Started

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Dig Deeper: Access Company Snapshots, Charts, Filings

• Apollo Group Inc. (APOL, Chart, Download SEC Filings)
• Education Management Corporation (EDMC, Chart, Download SEC Filings)
• The Washington Post Company (WPO, Chart, Download SEC Filings)
• DeVry, Inc. (DV, Chart, Download SEC Filings)
• ITT Educational Services Inc. (ESI, Chart, Download SEC Filings)
• Bridgepoint Education, Inc. (BPI, Chart, Download SEC Filings)
• Strayer Education Inc. (STRA, Chart, Download SEC Filings)
• Grand Canyon Education, Inc. (LOPE, Chart, Download SEC Filings)
• K12, Inc. (LRN, Chart, Download SEC Filings)
• Career Education Corp. (CECO, Chart, Download SEC Filings)

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