DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON
TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. U.S. Disclosure:
Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be
aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this
report as only a single factor in making their investment decision.
14 December 2009
Americas/United States
Equity Research
Education Services
Corinthian Colleges, Inc. (COCO)
CATALYST ALERT
COCO Releases 3 Year Default Rate
■ Event. In an 8K dated today, Corinthian Colleges (COCO) released details
on its 3 year unofficial federal student loan cohort default rates (CDR), which
it received from the Department of Education (DOE) last Monday.
■ Weighted average 3 Year CDRs for FY 05, 06, 07 were 99-128% higher
than the 2 year rates. The weighted average 3 year CDR was 23.3% for
2005 (~128% higher than the 10.2% 2005 2 year CDR), 27.2% for 2006
(~113% higher than the 12.8% 2006 2 year CDR), and 29.8% for 2007
(~99% higher than the 15.0% 2007 2 year CDR).
■ 3 year CDRs purely illustrative for now. Current DOE rules dictate that
schools that have 2 year CDRs at or above 25% for 3 years in a row or
above 40% for 1 year could face sanctions and lose the right to participate in
Title IV aid programs. Beginning with the FY09 cohort, the 2 year CDR
measurement period will change to 3 years, and the 25% sanction threshold
will change to 30%; the 40% threshold will remain unchanged. Sanctions
related to 3 year CDRs won’t be levied until 2014.
■ Which campuses crossed key thresholds? Based on 2007 3 year CDRs,
1 of COCO’s 40 OPEID numbers (i.e., the DOE’s designation for a main
campus and its branches) was above 40%; 5 exceeded 30% for 3 years.
■ Mgmt comments. In 8-K filing, management explained, "As disclosed
previously, the Company has recently implemen