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Remember those troubled waters at San Diego for-profit higher education giant Bridgepoint Education? They just got a little more navigable.

U.S. Department of Education regulators yesterday released long-awaited new restrictions tightening federal aid guidelines for for-profit colleges who fail to graduate their students or leave them with crushing student loan debts. Stats for Bridgepoint aren’t stellar in either category.

But the rules don’t go as far as originally proposed, and the news has shot up stock prices for Bridgepoint and other for-profit colleges. Here are details on the new guidelines from The New York Times:

Under the new rules, programs would lose their eligibility to dispense federal student aid — and as a practical matter, be shut down — if, over the next four years, their graduates fail to meet new benchmarks for loan repayment and ratio of debt to income. But amid intense lobbying by the for-profit college industry and pressure from Republican lawmakers, the department significantly eased the rules from an earlier draft: officials said, for example, that no program would lose eligibility until 2015.

Given Bridgepoint’s soaring enrollment, it’s not entirely clear if the new regulations will force any changes to the company’s business practices. Earlier statistics showed that student loan default rates at the company’s colleges were high, but below other for-profits. The Department of Education estimated that 5 percent of for-profit companies ultimately would lose federal aid eligibility due to the new standards.

Bridgepoint’s stock rose 12 percent early Thursday.

One major theme my colleague Will Carless and I developed in our Bridgepoint coverage is the effects of government and other regulation on the company’s fortunes. Friendly regulation spurred the company’s astronomical growth; harsher rules could hurt it. This news helps the company significantly.

Still, it’s not as if Bridgepoint is in the clear. Last month, New York’s attorney general began investigating the company and it continues to face inquiries from the Department of Education, Iowa’s attorney general and more possible federal restrictions.

The Reader’s Don Bauder continued excoriating the company in the wake of the new guidelines.

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.

Liam Dillon

Liam Dillon was formerly a senior reporter and assistant editor for Voice of San Diego. He led VOSD’s investigations and wrote about how regular people...

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