67 WALL STREET, New York - November 20, 2009 - The Wall Street Transcript has recently re-published its Q3 2009 Education Report offering a review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Management Teams -- Secular Trends -- Regulatory Concerns -- Focus on Quality -- Developing Postsecondary Education Programs -- Growth in Postsecondary Education -- Online Education -- International Students -- Student Funding -- Execution Risk -- Management Transition -- Acceleration of Enrollment Rates -- Return on Invested Capital -- Long Term Prospects -- Regulatory Uncertainty -- Valuation Levels -- Stafford Loans -- Earnings Growth -- Opporunity for Growth -- For-Profit Institutions -- Nontraditional Students -- Postsecondary Tuition -- Domestic Players -- Jobs Market -- Decline in Stock Prices -- Fundamental Trends -- Valuation Levels -- Postsecondary Education in China -- Global Education -- Growth Prospects

Companies include: SkillSoft plc (SKIL); Rosetta Stone Inc. (RST); American Public Education Inc. (APEI); Apollo Group Inc. (APOL); Bridgepoint Education Inc. (BPI); Career Education Corp. (CECO); Capella Education Co. (CPLA); DeVry Inc. (DV); ITT Education Services Inc. (ESI); Grand Canyon Education Inc. (LOPE); Strayer Education Inc. (STRA); Blackboard Inc. (BBBB) and Universal Technical Institute Inc. (UTI); Corinthian Colleges (COCO); Lincoln Educational Services (LINC); School Specialty (SCHS); New Oriental Education & Technology Group (EDU); Princeton Review (REVU)

In the following brief excerpt from just one of the in depth interviews in the Special Report, an industry analyst discusses the outlook for the sector and for investors.

Suzanne Stein, an Analyst in Morgan Stanley's New York-based research group, covers education companies. Ms. Stein joined Morgan Stanley in 2004 after serving as a Vice President in equity research covering telecom services at Goldman Sachs. Prior to Goldman Sachs, she served as an Associate at Donaldson, Lufkin & Jenrette. Ms. Stein holds a dual degree in finance and communications from the Wharton School, and the College of Arts and Sciences of the University of Pennsylvania. She has an MBA from the University of Chicago.

TWST: What are some of the top regulatory concerns for management at the companies and for investors as well?

Ms. Stein: One of the things about this industry is it's shocking to me that people are always surprised when these regulatory issues come up. I think there is always regulatory risk. I mean, I'm never going to be able to publish a note that says we have the "all clear" on the regulatory environment because there is always going to be those who question this industry.

The biggest regulatory issues all relate to Title IV, which is a federal financial aid program, and the rules surrounding that. So the rules around the sales practices of these companies have always been under a great deal of scrutiny, and there are very strict rules as far as how salespeople can be. And I hate to call them salespeople - admission reps. They can be compensated and that's something that's under review now. There's the negotiated rule making; they're basically going through the Higher Education Act, and they have picked out a couple of issues to focus on, one of them being the incentive compensation issue. I think that and the 90/10 rule, which places a ceiling on the proportion of revenues from federal student aid that for-profit schools are allowed to receive, are the biggest issues under regulatory review.

However, I think that this industry is always going to have that kind of major risk because so much of their funding comes from the government that they know any threat to that is seen as being very significant. So from the federal level, that's really what the concern is. I think when people look at industries like health care and see how the government has gone after companies in health care, private companies that profit from government funds, and they compare that to education and view this as kind of an at-risk industry for that reason. I think in many ways the industry is different. I think students make a choice to go to these schools. They are not forced to go to these schools, and they know upfront what the costs are, but I think that's how people look at it. They view those things as the biggest risk.

But I think what comes out of the negotiated rule making is really top of mind right now, and then some of the other things that are happening with respect to the 90/10 rule. I think less of an issue is what's happening with the switch from the federal lending to direct. I think the way we view that is whatever happens, the government will make sure that students have access to funds. It doesn't matter - I actually view it as less risky to have it come directly from the company once that transition is made.

Note: Opinions and recommendations are as of 07/23/09.

SUZANNE STEIN

Analyst

Morgan Stanley

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 57 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

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