While we’ve already had five different posts about the Democratic debate the other day, bear with us one more time to revisit it to pick out a little talked about issue (at least in the debates): education. There was only one question about education in the debate and it dealt with the No Child Left Behind Act.

There is a summary of the candidates positions on education in our forums, but that was about as in depth as we have gone. Furthermore more there is little else on the web about the economical impacts of legislation dealing with education. So forgive me if this seems more like a report than a blog post, but this should help everyone better understand education-based legislation and its impacts.

The main topic of discussion dealing with education, at least with the Presidential Candidates is the No Child Left Behind Act (NCLB). For those of you who aren’t familiar with this legislation we’ll give a brief overview, everyone else can skip ahead a bit.

NCLB has 11 points that it focuses on. Funding, flexibility, accountability, school district report cards, public school choice, extra help with learning, parental involvement, measuring knowledge, scientifically based research, reading first, and teacher quality.

While these seem like solid points (and in theory they are) NCLB has major shortcomings, in the administrations’ handling of the Act as well as NCLB itself. Without going too in depth some of these include: The failure to fully fund the Act (the Bush administration requested only about half the funding that the act provisions), corruption due to the strong motivation for schools to manipulate test scores, problems with standardized tests, violation of states rights, etc. The problems go on and on, check them out here. You can trust this even though it’s Wikipedia (We double-checked the sources).

At the debate the candidates were asked if they would keep the No Child Left Behind Act and change it, or scrap it altogether. Only Richardson and Biden were called on to respond, and they both said that they would scrap it. This point isn’t very important, except that it’s what made us think of education. The candidates (Democratic ones at least) would probably all choose to scrap NCLB and introduce a shiny new bill along the same lines.

OnTheIssues.com gives a good background about education, but these are mostly of little importance to investors. The really important thing to do is to watch whom will be increasing or decreasing funding, and where that money is going.

Some candidates, such as Joe Biden, want to increase the budget for updating schools and/or building new ones. If you see that a candidate supports smaller class sizes, then that generally translates into increased spending in construction of new schools and updating old ones. This of course would be good for various construction stocks, especially considering that an increase of just 10% in budget for building new schools in 2004 led to a school-building boom, and liberal plans tend to be even more lucrative.

Plans that aim to make college and other higher education more affordable can also be capitalized on, as some of these are traded publicly. Some of these include:

Apollo Group (APOL)

ITT Educational Services (ESC)

Career Education (CECO)

Corinthian Colleges (COCO)

Be warned though, these may be overvalued already. Also Corinthian Colleges operates in both the US and Canada. This means that easier access to higher education wouldn’t affect about one-fourth of their colleges.

The final type of educational reform we will cover is legislation aimed at getting and keeping more children in school. This type of legislation is beneficial for more general educational companies such as school supply producers and retailers. Keep in mind that the following companies would most likely benefit from any educational reform, and are a most likely good choice for any candidate focusing on educational reform regardless of the specifics.

3M (MMM)

Newell Rubbermaid (NWL)

Office Depot (ODP)

Staples (SPLS)

Remember to look at our candidate issue summaries for a summary of each Dem candidate’s position on education. Republicans, too. We hope that this was helpful to both people wanting to learn about educational reform and investors alike.