Office of Planning & Budgeting

September 7, 2011

Scrutiny and Economy Taking Toll on For-Profit Higher Ed

The past few weeks have brought a lot of bad news for the for-profit education sector. Federal and state scrutiny of practices, costs, and outcomes, combined with tightened regulations, high profile lawsuits, and student reaction to high prices in a bad economy, have taken their toll on the sector:

  • A state investigation has been opened to determine whether for-profit institutions have been improperly compelling employees to support the candidate currently opposing Kentucky’s Attorney General, a man who also happens to be leading a 20 state joint investigation into the practices of for-profit institutions.
  • Enrollments have plunged even more deeply than they did last year across the sector as a whole (14.1% on average), and most dramatically across the largest companies, including 47% at Kaplan, 41% at Apollo, and 26% at Corinthian Colleges.
  • As a result of tightening regulations, bad press, and plunging enrollment, stock prices are going down.
  • A journalist at the Atlantic is wondering if, in order to survive, these institutions should get out of the business of educating students and attempt to use their large infrastructure and resources as consultants to more traditional institutions that are needing to scale their online education operations, and increase their ability to serve the non-traditional student population.

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