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For-profit colleges faltering after years of explosive growth

By Justin Pope

Associated Press

Published: Friday, Oct. 19 2012 10:33 p.m. MDT

Students take notes during an economics class at the University of Phoenix in Taylorsville, Utah, Thursday, Aug. 5, 2010.

Jeffrey D. Allred, Deseret News

Enlarge photo»

When the University of Phoenix, the country's largest university, announced this 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.

Government data released last week showed total enrollment in higher education shrunk 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 4-year non-profit colleges (for-profit colleges enroll about 11 percent of students overall).

Then came Tuesday's announcement by Apollo Group Inc., 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 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 to 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.

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