Corinthian Colleges’ profit soars

Corinthian Colleges Inc., the for-profit provider of post-secondary education, said Tuesday that its fiscal second-quarter profit tripled. However, the company also reduced its earnings forecast as it braced for student loan cutbacks.

Net income rose to $8.11 million, or 10 cents a share, from $2.58 million, or 3 cents, a year earlier, the Santa Ana-based company said. Revenue for the quarter ended Dec. 31 increased 16% to $272.6 million.

Corinthian and other education companies are preparing for a halt in lending by SLM Corp., known as Sallie Mae, to students with a high risk of default. Corinthian said the development would reduce earnings about 3 cents to 4 cents a share and projected fiscal 2008 profit at the low end of its earlier-predicted range of 40 cents to 45 cents a share. Sallie Mae has provided 90% of private loans for Corinthian’s U.S. students.

Corinthian hasn’t fully shown the “likely impact of Sallie Mae’s plan to eliminate sub-prime student loans,” said analyst Michael Jaffe at Standard & Poor’s in New York.

Corinthian shares rose 29 cents, or 3.4%, to $8.82. The shares have declined 34% in 12 months.

The company has said it may require students to pay more in cash, and may expand an internal loan program or guarantee loans by other private lenders. Three-quarters of private loans to Corinthian students are sub-prime, or high risk, the company said.

Private loans accounted for about 13% of fiscal 2007 U.S. revenue, Corinthian said. The company also operates in Canada.

Enrollment increased 9.6% to 67,744 by Dec. 31, and total student starts rose 10%, Corinthian said.