A Trump Win Lightens The Regulatory Risk For DeVry Education

Trace Urdan of Credit Suisse upgraded shares of DeVry Education Group Inc DV to Outperform from Neutral with a price target raised to $30 from a previous $24, as the education company will see more favorable policies out of a Trump administration.

Why Trump Matters

Under current federal law, borrowers can evoke the Defense to Repayment (DTR) discharge, which could result in loan forgiveness if a school they attended committed fraud or otherwise violated applicable state laws. According to Urdan, the risk presented by DTR is now "greatly reduced" under a Trump administration, either through a reversal of the rule or a more school-friendly definition of harm.

Similarly, Gainful Employment (GE) regulations, which require for-profit schools to meet minimum thresholds of debt-to-income rates for graduates or risk losing federal funding, are likely to be "muted" under a Trump presidency as well.

Woes Remain, But Concerns Wane

Urdan continued that DeVry's woes still plague the company, as its core DeVry University business continues to see double-digit volume declines amid an increasingly competitive environment. Nevertheless, some of the concerns surrounding the company has now abated and the upside in DeVry's stock is more compelling.

Bottom line, the analyst stated that concerns over DTR claims prevented him for recommending the stock, but a Trump win now lightens the regulatory load.

At last check, DeVry was up 8.94 percent at $25.60. Image Credit: By Daderot (I took this photograph.) [Public domain], via Wikimedia Commons