UPDATE 1-Corinthian says 7 pct programs fail new rule test
June 27 (Reuters) - For-profit education company Corinthian Colleges Inc said 7 percent of its programs did not comply with new education rules, according to the latest data on loan repayment by students released by the Department of Education.
Under the gainful employment rule, at least 35 percent of graduates and dropouts of programs must be paying back loans, or their loan payments must equal 30 percent of discretionary income or 12 percent of total earnings.
Schools that fail to meet this standard three years out of four will no longer be allowed to accept students who pay with federal loans.
Corinthian, which has been hit the most by the new rules, said out of 44 programs that failed the test, the company has stopped enrolling new students in 13 programs.
These 44 programs accounted for 5 percent of Corinthian's graduates during the FY07-FY08 period, it said.
Corinthian said data released did not include 164 programs, which passed the required metrics.
The data is an indication of future performance and would not result in any regulatory action, as the rule only takes effect in mid-2012.
On Tuesday, an analysis by an investment research firm Height Analytics had estimated 13 percent of Corinthian's programs failing the test.
Shares of Corinthian were up 2 percent at $2.59 on the Nasdaq on Wednesday.
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