Enrollments Plunge at Many For-Profit Colleges

Discussion in 'General Distance Learning Discussions' started by imalcolm, Aug 17, 2011.

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  1. imalcolm

    imalcolm New Member

    Enrollments Plunge at Many For-Profit Colleges - Finance - The Chronicle of Higher Education
    (The article is behind a paywall)

    What I found very interesting was this graph: http://chronicle.com/img/photos/biz/43.75-new-student-trend-chart.gif
    While Phoenix, Kaplan, and others are all way down in enrollment, APUS is way up. Just more confirmation that they are doing something right.
     
  2. CalDog

    CalDog New Member

    I previously posted the following statistics in another thread:

    The same UoP data also show the following:

    So UoP has lost more than 75,000 students over just the past year. And since their new enrollments are way down, their total enrollment will probably continue to shrink in the near future.

    Of course, these numbers are for UoP specifically, and do not necessarily apply to other for-profit schools. However, if UoP is having trouble maintaining enrollments and attracting new students, then it wouldn't be surprising if other for-profits are facing similar challenges.
     
  3. Cyber

    Cyber New Member

    The reason why APUS is succeeding, and why it will continue to succeed is because they offer good programs at a very affordable rate. Why would someone pay between $1800, $2300 or more for a master level class when APUS offers the same for $975? The answer to that question is mainly why APUS is succeeding and why that success will continue. The next thing APUS needs to do is to start offering "very affordable" doctorate degrees. Doing that will further pull online students (majority of students at online-only doctoral granting schools are those pursuing doctorates) away from those expensive online schools to them. The business model is actually very simple and they all know it. However, greed is what will eventually put "all of them" (except schools like APUS) out of the market and I see this happening in the future.

    Personal Observation: When i joined this forum there were many members who were attending NCU for their doctoral degree. Now, as far as I know, all of them are withdrawn from NCU. It would be interesting to know how raising tuition several times a year as well as changing policies every couple of months has affected doctoral enrollment at NCU. In my opinion, raising tuition excessively and frequently for a doctoral degree with limited utility is a very bad business practice!
     
  4. Maniac Craniac

    Maniac Craniac Moderator Staff Member

    I'm afraid to do any degree at all for the reason that tuition has been rapidly rising across the board. You basically have to expect that by the time you finish, the degree will cost 150% of what you originally thought it would.
     
  5. SurfDoctor

    SurfDoctor Moderator Staff Member

    I agree. It is interesting that they continue with the same mentality that is apparent in any other form of economic bubble. They continue as though there will never be an end to the boom. They get greedier and greedier until the system can no longer sustain their avarice and the whole system collapses under its own weight. It's a bubble that is beginning to pop.
     
  6. me again

    me again Well-Known Member

    I enrolled in NCU's doctoral program immediately after they achieved regional accreditation because their tuition rates had not become commensurate with all the other online schools. I knew that NCU's tuition would invariably increase.

    Similarly, I enrolled in APUS's MPA program after they achieved regional accreditation because their tuition rates had not become commensurate with all the other online schools. I knew that APUS's tuition would invariably increase -- and it continues to incrementally increase it's tuition. It will invariably follow the same path as all the other online schools. Get on-board now while the rates are still good.
     
  7. SurfDoctor

    SurfDoctor Moderator Staff Member

    Have you noticed how many more advertisements you see for UoP?
     
  8. jayncali73

    jayncali73 New Member

     
  9. mcjon77

    mcjon77 Member

    IMHO, this is also a perfect example of brand destruction. The recruiting actions of some of the largest for-profit schools has not only gained the attention of government officials, it has also severely damaged the reputations of their flagship schools in particular, and the entire for-profit university industry in general.

    For a while now I have thought that the largest for-profit schools (e.g. Kaplan, and UoP) had a business model which was based on the ignorance of their customers regarding their education options. I kept asking myself why would someone spend $40K on a Kaplan or UoP DL MBA when there are several state schools that offer one for under $10K, and even more that have one for less than $20K. I could only come up with 3 answers for this.
    1) Students who don't know of all the other options.
    2) Students who don't differentiate between a UoP MBA and an MBA from some other school.
    3) Students who are not able to attend other schools.

    I believe that the bad press has so damaged the reputation of these schools that universities like UoP and Kaplan can no longer rely on number 2. The very nature of how quickly information is being disseminated today is gradually chipping away at number 1. Which leaves us with number 3.

    The problem with number 3 is that even that is being chipped away at. I'm sure many of the old-timers remember way back in the '90s when if someone was looking for a RA DL MBA program their options were EXTREMELY limited. The same was true (perhaps more so) for doctoral programs. As a result, you still had relatively smart people going to places like NCU for a doctorate or even UoP for a masters, because there were few other options.

    Now the landscape has completely changed. Many traditional B&M schools are offering DL/flexible degree programs. As a result, they are scraping the cream of the crop from the perspective DL student base and leaving the for profits with what is left over. For instance, look at Valdosta State's DPA program or Dakota State's DSc program and ask yourself a question: Where would those admitted students have gone if those programs did not exist. My bet is that at least some would have wound up at UoP or NCU.

    However, now those non-profit schools are creating these DL doctoral and other graduate degree programs and can grab most of the best students (perhaps better students than they would have gotten with only a traditional, non-DL program). As more and more schools open up graduate DL programs the pool of qualified applicants left for the for-profits is going to get smaller and smaller, leaving those for-profits that have sullied their reputation to take what is left, and ultimately (if they wish to maintain their revenue levels) hunt for people that are just not qualified.
     
    Last edited by a moderator: Aug 17, 2011
  10. Anthony Pina

    Anthony Pina Active Member

    Unless you enroll at an institution that has a "tuition lock-in" program, where your tuition is guaranteed not to change, as long as you maintain enrollment.
     
  11. major56

    major56 Active Member

    Even though the UOP and Kaplan were early market entrants … their business models are easily replicated, and have been so by both traditional and non-traditional education industry competitors— the early entrant advantage hasn’t been sustainable. E.g., “Because most business activities and processes have come to be embedded in software, they become replicable, too. When companies buy a generic application, they buy a generic process as well. Both the cost savings and the interoperability benefits make the sacrifice of distinctiveness unavoidable” (Carr 2003, p. 44, HBR). There is nothing proprietary as regards Web-based postsecondary education; it’s only infrastructural.

    “What makes a resource truly strategic - what gives it the capacity to be the basis for a sustained competitive advantage-is not ubiquity but scarcity. You only gain an edge over rivals by having or doing something that they can't have or do” (Carr 2003, p. 42, HBR).
     
  12. lawrenceq

    lawrenceq Member

    I think more people are looking at state and private schools. Why attend UOP when you can attend a state or private school for a fraction of the cost?
     
  13. ITJD

    ITJD Active Member

    I'm sure the recent debt measures requiring graduate loans to begin payback terms immediately has nothing to do with this :)

    Granted it's probably a trend started well before the announcement, but it will add to the trend.
     
  14. SurfDoctor

    SurfDoctor Moderator Staff Member

    The bubble is popping.
     
  15. major56

    major56 Active Member

    "Optimism about a future of indefinite progress gave way to uncertainty and a sense of agony" (re historian David S. Landes).
     
  16. GeeBee

    GeeBee Member

    University of Illinois Springfield (and probably other U of I campuses) has a tuition rate guarantee. Whatever the tuition rate is when you first sign up for classes is the rate you pay until you graduate, as long as you can graduate in five years or less.
     
  17. SurfDoctor

    SurfDoctor Moderator Staff Member

    Classic bubble-pop mentality. Good quote.
     
  18. CalDog

    CalDog New Member

    Let's suppose that the for-profit education sector has stopped growing -- which seems like a realistic assumption, at least for the foreseeable future. What are the implications of this change? One obvious answer is that we might expect the industry to consolidate, e.g. via mergers, takeovers, and acquisitions.

    Non-profit universities don't usually make those sorts of moves. For example, we wouldn't expect the University of North Dakota to merge with the University of South Dakota for greater operating efficiency. Nor we would expect the University of California to make a hostile takeover bid for the University of Nevada.

    But for publicly-traded companies, this is all part of the game. They have to be thinking about it.

    For example, it was noted above that the University of Phoenix (owned by Apollo Group, or APOL) has lost 75,000+ students over the past 12 months. In contrast, it was also noted above that the American Public University System (owned by American Public Education, Inc., or APEI) has been growing, and now has enrollment of 80,000+.

    In theory, one move that APOL could make to restore enrollment and growth would be to buy up APEI. APEI is currently worth over $600 million (based on market cap) -- but APOL is worth over $6 billion. It would likely be economically and legally feasible for APOL to acquire APEI, if they wanted to do so.

    Let me emphasize that this is a totally hypothetical example; I have no knowledge of any potential takeovers, mergers, or acquisitions involving APOL, APEI, or anyone else in the for-profit education sector. But I think it is likely that we will start to see such moves if the sector as a whole is stable or shrinking. If the big fish can't grow in the way in that they used to, then they may start to look hungrily at the smaller fish.
     
    Last edited by a moderator: Aug 18, 2011
  19. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    I can't see the University of Phoenix buying out American Military University. American Military University is living proof that it is possible to be an ethical for-profit. The two corporate cultures wouldn't merge well.
     
  20. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    That's an interesting point, CalDog. Accreditation makes it harder to do this seamlessly -- it's not like cars, where you can buy Ford and just tell the factory to start slapping the "CalDog Motors" logo on the hood instead. And while I realize you were just choosing schools for an example, if Apollo bought APUS and ran it their way, they'd screw up everything good about APUS that's led to its strong stable growth.
     

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