Corporate, Domestic, Education Quality, For-Profit, Investors, Legislation, Regulatory, Required, Retention Rates, Unemployment, University & College - Written by on Friday, February 24, 2012 12:00 - 0 Comments

Earnings Crunch At Strayer As For-Profits Face Enrollment Drop & Other Headwinds

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Herndon-based Strayer Education saw profits fall 19% in 2011 to $106 million, compared with $131.3 million in 2010. Total enrollment reached 50,432 for the 2012 winter term, down 12% from 57,608 students at the same time last year. Strayer and other For-Profit schools saw ongoing pressure as the industry faces a double-barrel shotgun of economic and regulatory woes. Steven Overby of The Washington Post reports:

Many online-degree purveyors saw demand explode at the dawn of the recession as laid-off workers sought new skills. But as the economic recovery plods along, balance sheets across the industry are suffering.

“Students are nervous about borrowing the money, even though the dollars are available to them,” said Trace Urdan, an analyst with Wunderlich Securities.

“It’s not practical for an adult who has responsibilities and dependents to enroll in a university at a time when their primary objective is looking for a job,” Robert Silberman, Strayer’s chief executive, said in an interview.

Overby reports that the schools saw more strength among graduate students and students sponsored by their corporations. In November, Strayer purchased the Jack Welch Management Institute for a reported $7 million, bringing Jack Welch and Suzy Welch on board to help continuing running the program.

The challenges are not unique to Strayer. Other for-profit education companies, such as Capella, Apollo Group (which owns University of Phoenix) and Kaplan Higher Education, have also seen earnings and enrollment drop. Kaplan is owned by The Washington Post Co.

Last summer, federal regulators took issue with the academic caliber and recruitment efforts at some for-profit education providers after an investigation suggested that many graduates struggled to land jobs and repay loans.

New requirements have forced many companies to examine the degree programs they offer, sometimes shortening the time to graduation or cutting them altogether. Some firms also have changed the way they compensate recruiters. “I don’t think that those regulations really had much to do with the enrollment downturn right now,” Silberman said. “I think the publicity around investor-funded education was quite negative a year ago. That had a short-term impact.”

To compound the industry’s woes, bricks-and-mortar institutions pose a greater threat. Once slow to adopt online-only courses and academic programs, many universities now view them as a viable source of revenue.

Via The Washington Post

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