S&P: Education Management outlook stable

Standard & Poor's said it affirmed its BB- corporate credit rating on Education Management LLC and revised the outlook to stable from positive. All related issue-level and recovery ratings on the company's debt issues remain unchanged.

The agency said the outlook revision reflects a higher degree of regulatory risk following the notice of proposed rulemaking on gainful employment published by the U.S. Department of Education recommending measures under which post-secondary educational programs would remain eligible for federal loans to students under Title IV funding. Among these conditions is a proposed requirement that post-secondary programs demonstrate federal student loan principal repayment rates at certain thresholds. On Aug. 13, the department published certain data on student loan repayment rates, and S&P said some of Education Management's schools had repayment rates that fell below the threshold for retaining Title IV funding eligibility.

The BB- rating reflects Education Management's dependence on federal student loan programs, its good business position in the for-profit post-secondary education market and declining debt leverage resulting from strong operating performance and debt repayment from the proceeds of its October 2009 initial public offering, S&P said.

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