WRAPUP 1-Education cos see strong FY; rely on internal financing

* Lincoln profit beats Street by a penny

* Corinthian profit in line

* Lincoln raises, Corinthian reaffirms FY view

* Corinthian shares up 2 pct, Lincoln down 1 pct

Nov 5 (Reuters) - Education companies continue to remain positive on their outlook for the year as they posted in-line quarterly profits and said they would continue to finance students internally as the credit situation in the U.S. worsens.

Uncertainty in the credit market has forced loan providers to exit the student loan market, leaving education companies to provide financing on their own or face the prospect of a drop in enrollments.

Corinthian Colleges Inc (COCO.O) said it would continue to fund its internal student lending program through operating cash flow.

Lincoln Educational Services Corp (LINC.O), which is supporting students with its propriety loan program, said the Higher Education Act, 2008 has addressed uncertainty over how students finance their education.

It said the higher financial aid limits have reduced the tuition gap between the amounts available from financial aid and amounts students have to finance with other parties, including Lincoln.

As of Sept. 30, it had made about $22.3 million in loan commitments.

STRONG RESULTS

Lincoln posted third-quarter income from continuing operations of 22 cents a share, a penny above market estimates.

Revenue increased 16 percent to $100.5 million.

Corinthian reported first-quarter profit of 7 cents a share, in line with market expectations. Revenue rose 18 percent to $289.6 million.

Student starts increased at both the companies. Lincoln's student population was up 15 percent.

STRONGER OUTLOOK

The companies remained optimistic about their outlook for the year.

Lincoln raised its 2008 outlook and said it sees a 9 to 11 percent increase in annual starts.

It sees net income growing at 30 to 34 percent on revenue growth of 12 to 13 percent.

"We expect a strong fourth quarter and expect to begin 2009 with approximately 2,500 more students than we had in 2008, positioning us well for 2009," Lincoln Chief Executive Officer David Carney said.

The company said its diploma and associate degree programs will help it during the economic slowdown.

Meanwhile, Corinthian backed its 2009 outlook and raised its full-year start estimate by 1 percentage point to 8 to 10 percent.

"Although difficult to quantify, current trends indicate that the weak economy has helped increase our marketing leads and start growth," Corinthian CEO Jack Massimino said.

It forecast a strong second-quarter profit, but revenue outlook fell short of market estimates.

"We believe we are in a good position to weather the current downturn in the economy," Massimino said.

Shares of Lincoln were down 20 cents at $13.80, while Corinthian was up 17 cents at $14.69 in morning trade on Nasdaq.

(Reporting by A.Ananthalakshmi in Bangalore)