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For-profit higher education is shrinking

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press

Some schools close campuses while facing declining enrollments.

Tuesday, October 23, 2012 - 12:01 am

When the University of Phoenix, the country's largest university, announced last week it's closing 115 campuses and satellite locations, it signaled more than a sudden availability of commercial real estate near highway interchanges, where for-profit colleges like to set up shop as a student convenience.

After years of explosive growth that really caught fire when the economy collapsed four years ago, for-profit higher education is shrinking fast.

That's not a good thing for providers like Phoenix, at least in the short run.

Whether it's good for them, for students and for the economy in the long run – well, that depends whom you ask.

New data throw the trend into relief. First, government figures released this month showed that total enrollment in higher education shrank nationally in the fall of 2011 for the first time in at least 15 years.

The overall decline was just 0.2 percent, but it was driven by a 2.9 percent drop in the for-profit sector, which offset an increase at four-year nonprofit colleges (for-profit colleges enroll about 11 percent of students overall).

Then came Oct. 16's announcement by Apollo Group, the University of Phoenix's parent company, that it would shutter roughly half its physical locations, though current students will be able to continue in their programs.

The company couched the move in terms of growing interest from students taking online courses, and it emphasized just 4 percent of students were affected (most of its students are online).

But there's no hiding its decline in enrollment – it currently enrolls about 328,000 students in degree programs, down from 381,000 a year ago and a peak of more than 475,000 in 2010.

On a yearly basis, enrollment is down 15 percent compared with a year ago at The Washington Post Co.'s Kaplan, which is also closing nine campuses; down 21 percent at Career Education Corp. (which operates Le Cordon Bleu cooking schools among others); and down 16 percent at ITT Educational Services, according to data provided by BMO Capital Markets. (An exception is military-focused American Public Education, Inc. which is booming on the heels of the Post 9/11 G.I. Bill).

BMO managing director Jeff Silber cites a range of explanations: the economy, negative publicity and more aggressive marketing from traditional universities.

But Silber says the Obama administration's regulatory pressure has also been a major factor, particularly its aggressive of enforcement of rules preventing colleges of any kind from paying recruiters based on the number of students they enroll — once a common practice by for-profits.

For-profit colleges say they are refocusing their efforts on enrolling students who can finish a degree and helping them find work when they graduate.