Education, From The Capitol To The Classroom

What The University Of Phoenix's Cuts Say About The State Of For-Profit Colleges

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    It’s “another clear signal that there is a serious problem building in the education industry,” writes Wall Street Cheat Sheet:

    Multiple news outlets are reporting the company behind the University of Phoenix, a for-profit university with more than 328,000 students nationwide, is shuttering 115 brick-and-mortar locations in an effort to save more than $300 million as its revenue and student body shrinks.

    UPDATE: Network Indiana reports the Indianapolis University of Phoenix campus off Interstate 465 near the Castleton Square Mall will remain open.

    The closures will halve the university’s physical footprint, leaving roughly 112 “learning and student resource” locations. But the move only affects 4 percent of the school’s total enrollment — roughly 13,000 students.

    We’ve written before about the controversy surrounding for-profit universities, which have been publicly pilloried before Congress. A Government Accountability Office report found for-profits were “a mixed bag.” But some have defended for-profits as scapegoats for broader problems with student debt in higher education.

    More from The New York Times:

    Enrollments at the University of Phoenix and in the for-profit sector over all have been declining in the last two years, partly because of growing competition from other online providers, including nonprofit and public universities, and a steady drumroll of negative publicity about the sector’s recruiting abuses, low graduation rates and high default rates.

    Late last month, Kaplan Higher Education, a division of the Washington Post Company, announced that it was closing nine of its campuses and consolidating four others into nearby locations. The company did not give a reason, but in an August filing with the Securities and Exchange Commission it disclosed that an accrediting commission had warned that its campuses in Baltimore, Indianapolis and Dayton could lose their accreditation — and with it, eligibility for the federal student aid that makes up more than 80 percent of Kaplan’s revenues — for failure to meet student achievement requirements.

    Put it in investor-speak: “Education stocks are value traps” right now, Piper Jaffray analyst Peter Appert said, as reported by the AP.


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