On June 2, the Department of Education released its long awaited "gainful employment" rules.

Until then, owners of for-profit schools and investors interested in the education sector had feared that the new rules would cut federal financial aid to students who attended schools whose graduation rates and career salaries were below the standards set by the Department of Education ("DOE").

The good news is that the 437-page final regulations the DOE issued turned out to be more favorable than many had expected.

Despite this, there is still a level of uncertainty about what the new rules mean for the owners and operators of for-profit post secondary schools and what impact they will have on operations and financial performance.

On the one hand, many investors saw the new rules as a positive sign and stock prices of the publicly-traded post secondary education companies in MidCap Advisors' Education Sector Index soared when the new rules came.  This suggests that investors believe the news rules eliminate some uncertainty that has plagued the sector and overall were good for the industry.

So the question now is whether this reaction is justified -- or is the renewed enthusiasm for the post-secondary education sector premature?

The new rules will certainly change how many for-profit schools operate.  In addition, the slow economic recovery has continued to benefit the secondary and technical school markets as students look to improve their skills and become more employable.  And finally, the increased fiscal discipline at the state level has also begun to breath life back into the for-profit K-12 market as states continue to slash public school spending.

So is the for-profit educational sector preparing for a rebound in 2012?  As investor flock back to the sector many school owners think so and believe that now is a good time to sell.  If you own a for-profit school and would like to explore your options, please contact John Parnell at MidCap Advisors.