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The Associated Press August 4, 2011, 12:48PM ET

DeVry buys Caribbean medical school for $235M

For-profit school chain DeVry Inc. said Thursday that it acquired a medical school in the Caribbean for $235 million as it builds its healthcare-related program offerings.

The school, American University of the Caribbean, is privately held and located on St. Maarten, which is near Puerto Rico.

DeVry already owns the Ross University School of Medicine in the Caribbean. It has about 4,800 students, while AUC has about 1,000 students. The schools cater to Americans who want to practice medicine in the U.S. -- 90 percent of AUC's students are U.S. citizens.

In the U.S., DeVry owns a nursing school chain, Chamberlain, and Carrington, which offers physician's assistant courses and other healthcare degrees.

The company's medical and healthcare division makes up 26.5 percent of its revenue, according to FactSet. Chamberlain's enrollments growth has helped DeVry weather the steep decline in student enrollments that has hit the for-profit education sector since late last year.

Student enrollments have fallen throughout the proprietary school industry. The Department of Education tightened regulation of the sector, and many schools have raised admissions standards. Several companies have also said that negative publicity about the high rate of defaults on student loans and allegations of poor quality of for-profit programs industry-wide have hurt enrollments.

Former AUC students had a default rate of 0.8 percent in the latest year records are available -- a "minuscule" rate, said UBS analyst Ariel Sokol. Keeping student defaults low is crucial for for-profit schools if they want continued access to the government's financial aid programs. According to the Department of Education's new "gainful employment" rule, if too many graduates are carrying too much debt, and at least 35 percent of former students are not repaying their loans, the program can lose access to government student loans.

DeVry expects the AUC acquisition to add about 5 cents per share to its earnings for the year that ends in June 2012.

The company's shares rose 7 cents to $59.85 in midday trading.

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