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1 Page 1 of 5 Administration Home News Administration February 3, 2013 For-Profit Colleges Take a Step Back to Regroup By Goldie Blumenstyk A rash of TV commercials the University of Phoenix's "Let's Get to Work" ads and the DeVry University "Know How" spot, for example offer a conspicuous glimpse at the ways big players in the for-profit college industry are now scrambling to reverse two years of falling enrollments, campus closures, and employee layoffs. With a few exceptions, the industry remains in retrenchment, staying profitable thanks largely to downsizing and using tuition freezes and extensive tuition discounts to keep enrollments from plummeting even lower. Enrollment in for-profit colleges fell by about 7 percent from the fall of 2011 to the fall of 2012, according to December estimates from the National Student Clearinghouse. That is a much steeper decline than the drop of 1.8 percent for higher education over all during the same period. "The swagger of a few years ago is clearly gone," says Kevin Kinser, a professor of education at the State University of New York at Albany who studies nontraditional higher education. At a time when students are more price-conscious, for-profit colleges may seem less appealing, says Mr. Kinser. Or, he says, some students may be "deciding it's not worth it" after finding out how preceding students fared after taking those programs. Over the past two years, for-profit colleges have come under growing scrutiny from federal lawmakers, state regulators, skeptical investors, and consumer advocates, who have questioned their recruiting tactics and educational quality. An increasing number of nonprofit colleges have also begun to offer programs online, making it tougher for the for-profit institutions to compete on factors like convenience. New federal regulations now also make it explicitly illegal for the colleges to pay incentives to their admissions representatives on the basis of the number of students they enroll. Mr. Kinser says the declines in enrollment that coincide with that new regulation

2 Page 2 of 5 suggest that without those incentives, "they're having a tougher time recruiting." New Discounts Some for-profit institutions are still growing at a brisk clip, including American Public University, Grand Canyon University, and National American University. But they are the exceptions. "Those that have grown through the recession tend to have lower prices," says Robert Lytle, co-head of the education practice at the Parthenon Group, a consulting company. For the rest, contraction has been a major theme over the past two years. Career Education Corporation announced the closing of a quarter of its 90 campuses and a reduction of 900 positions; Corinthian Colleges took steps to sell or close nine campuses; DeVry announced plans to cut its employee count by 570; and Capella Education planned a reduction of 185. Last month the University of Phoenix and its parent company, the Apollo Group, began the elimination of 115 of its 227 campuses and learning centers, and 800 jobs, in addition to the 700 positions it cut two years ago. The climate creates an unprecedented test for the industry, says Jerry Herman, an analyst with Stifel Nicolaus, an investment bank. "Those that can innovate in a way that can deliver good value for the cost will do better," he says. That's one reason, he notes, that so many of the for-profit-college companies are cutting their prices with new kinds of scholarships and discounts. Capella, Career Education, Corinthian, DeVry, Phoenix, and Strayer have instituted or are planning such tuition adjustments for at least some of their programs. Last month ITT Educational Services went even further, announcing that an "Opportunity Scholarship" program it had been testing at 24 of its campuses would be extended to all 150 of them. Total enrollment at ITT decreased by nearly 17 percent, to 61,059, as of December 31, compared with 73,255 a year earlier. All About Jobs Looking to differentiate themselves from one another and from their nonprofit competitors, several of the companies have begun new advertising blitzes, most of which aim to highlight how their educational programs can help students get jobs. Phoenix has been using its television commercials to showcase new relationships it has forged with employers, the career-planning emphasis it has added to its curriculum, and the connections that students can make through the university's alumni network.

3 Page 3 of 5 It plans to introduce another new ad during the broadcast of the Grammy Awards this month. Just as Strayer University began to promote itself to working adults and their employers with its Jack Welch Management Institute, Phoenix announced an executive-education venture with Clayton Christensen, the Harvard Business School professor known for his work on the impact of "disruptive innovation." Phoenix wants to show that it can "stand for more than convenience, access, and online," says Gregory Cappelli, Apollo's chief executive, in an interview with The Chronicle. But the university may be facing a regulatory challenge. In January it disclosed that it expects to be placed "on notice" by its accreditor. The company had previously reported that the accreditor, the Higher Learning Commission of the North Central Association of Colleges and Schools, had raised questions about the ratio of fulltime faculty to students and the rate of student-loan defaults. For the whole sector, the late-january announcement that its most visible critic in Congress, Sen. Tom Harkin of Iowa, would not seek re-election in 2014 may have seemed like good news. But for now, Mr. Harkin, as chairman of the Senate education committee, "still has the gavel," notes Mr. Kinser.

4 Page 4 of 5 Powered by Tableau Comments 0 Powered by DISQUS Add a comment comments 0 likes received Type your comment here. Post as Showing 5 comments Sort by Oldest first Follow comments: by by RSS Real-time updating is paused. (Resume) Carl Michael Letamendi 23 hours ago You know, in November of 2011, I wrote an article predicting that this would happen. Since Chronicle might not post a comment containing a link, just google: "7 Predictions - The Gradual Delfation of the Student Loan Bubble" The more I learn about what is going on now, and compare it to what I predicted, what lies ahead is even scarier... 4 people liked this. Like

5 Page 5 of 5 willynilly 21 hours ago The definition of "Regroup" in the for-profit education rip-off industry is as follows: Try to invent and or creatively innovate new methods, tricks, slight of hand tactics to fool, deceive, mislead, bamboozle, cajole, misinform, confuse, dupe, cheat, con, lie so that those who are poor, undereducated and are eligible for benefits under the Guaranteed Student Loan Program (GSLP) are cleverly enticed to enroll in one of our sleazy schools. Special emphasis should be placed on preparing advertisements that are duplicitous, false, sly, and fraudulent in nature. The industry has found that the greatest enrollment results can be attributed to those schools who are the most clever in disguising the actual hoax involved in the recruitment strategy, delaying the discovery of our chicanery until the students personal finances have been wiped out and his/her eligibility for the GSLP has been exhausted. For-profits who can achieve mastery of the new "Regroup" plan and strategy will continue to prosper for some time, unabated, in the grand scheme to garner skyrocketing profits from the educational dollar pool without ever really educating a student or placing him/her in the career position they so stupidly believed they would qualify for upon program completion. 6 people liked this. Like feudipandola 1 hour ago CEO Salaries: Strayer $42,000,000; Apollo $2,800,000; DeVry $5,400,000; Corinthian $8,200,000...that's a hell of as lot of Pell grants and student loans. 1 person liked this. Like 20antarctic10 1 hour ago As Gabriel Heatter often said "There's good news toight" 1 person liked this. Like msog hour ago I think the for-profits will use this time to regroup, get more serious about quality and outcomes, and then will begin to grow. Unlike non-profit higher ed they are willing to adjust to the reality of the world. 3 people liked this. Like Copyright All rights reserved. The Chronicle of Higher Education 1255 Twenty-Third St, N.W. Washington, D.C