Corporate, Cost of Education, Domestic, Education Quality, Ethics, For-Profit, Investors, Legislation, Regulatory, Required, Retention Rates, Startups, University & College - Written by on Thursday, March 1, 2012 8:29 - 0 Comments

Heard: Capella University On The Ropes But Planning For A Comeback In Round 4

by Dan_H via Flickr under Creative Commons
James Walsh at The Minneapolis Star-Tribune reports that Minnesota-based “Capella University is trying to revive its flagging fortunes.” The school was once ranked one of the hottest startups in Minnesota, he notes.

From the first class in 1993, enrollment in the online-only school grew steadily to 14,600 in 2005. Then new rules opened up federal financial aid to virtual universities, and by the end of 2010 Capella had 38,000 students in programs from undergraduate degrees through doctorates.

Wall Street loved it. The Minneapolis-based company’s shares rose nearly 400 percent in their first few years on the market, ranking for a time as the most successful Minnesota initial public offering of the new millennium. But, like a straight-A student whose grades start to slip, Capella is facing new challenges.

He points to the 2011 results earlier this month, which showed a third fewer students enrolled compared to the earlier year. Profits were down. And the company saw its stock price slide by more than half since the 2010 peak. Point to the weak economy, more regulation or competition from traditional colleges that are expanding online classes. One thing is sure, Capella and other for-profit colleges are starting to breathe heavy. Their growth has been either unsustainably rapid early on …. or built on unethical foundations (now metered by federal regulations). WA had a previous dust-up with Capella staff and students over their interim president’s take on college rankings. Unfortunately, the stock market can be a harsher ranking than the US News Report. That’s what Capella is experiencing now.

All that being said, Minnesota is known for having many good managers, good companies with ethical policies and leadership. Capella leadership insist they are adjusting strategy to keep growing. We don’t know Capella well enough to know if they can be counted as one of them. But we do think there is potential for a For-Profit school to stake a leadership position of excellence in management, technology and quality. Will Capella regain its stock market luster? Walsh writes:

In an interview at the gleaming Capella Tower in downtown Minneapolis, chief executive Kevin Gilligan promised changes in the company’s approach. In much the same way Capella continually tweaks its curriculum to meet market changes, so too is the university promising to change how it recruits, retains and supports its students. “First, we’re making steady progress as we look to return to new enrollment growth,” Gilligan said. “Second, we have a plan in place to significantly improve learner success. And, third, we continue to be encouraged by our brand-driven marketing strategy.”

But the school is also cutting costs, eliminating nearly 200 non-faculty positions. School leaders say their graduation rate of 50% is higher than the industry average. They are using analytics to flag students who are falling behind. They are trying to spread best practices between top teachers. They are trying to improve retention rates. It is changing its marketing, aiming toward top career learners. That’s a shrinking pool of people, however, that all the for-profit colleges are going after at the moment.

Now, Gilligan said, Capella is shifting that investment into building its own brand through radio, television and social media. The idea is to create a “community of people who want to make a difference,” he said. The end result, Capella officials hope, is that the students Capella attracts in the future will be more committed to the school and to their educational success. That, in turn, will mean more sustained growth for Capella. Appert, the analyst, is optimistic. “The bottom line is they have the high-quality programs and are making the right strategic decisions,” he said.

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