Shrinking student enrollment and increased regulatory scrutiny are continuing to test the mettle of for-profit education companies. As executives announce their quarterly earnings and update analysts on their financial progress, or lack thereof, several interesting themes affecting the industry have emerged or continued to play out, including some that are off the beaten path:
1. Addressing military enrollment declines
For Bridgepoint Education, provider of online and face-to-face courses, military personnel make up 26% of its total course enrollment. CEO Andrew Clark reported during the company’s earnings call on two trends that are slowing a decline in military enrollment to a rate that’s less than the decline in civilian enrollment.
One trend is that some active-duty personnel are concerned about military downsizing and are trying to use as much of their educational benefits as possible before potentially leaving service. Additionally, those who are hoping to stay on are trying to position themselves for promotions, so they're using education benefits to get their undergraduate or graduate degree.
2. Getting smarter on student borrowing
Bridgepoint has introduced a program that encourages new students, through its financial counselors, to be more conscious of what they borrow, Clark said. That means influencing them to seek a financial aid package to cover only their tuition and fees, and not necessarily borrowing to the maximum amount allowed by federal rules.
Additionally, Apollo Education Group reported that it had invested in making sure that students were more financially aware before taking on debt. The company also said it saw a general opportunity in its financial aid program to modernize and simplify the process at University of Phoenix, decreasing the number of steps by more than half. Student borrowing issues were also on the table during American Public Education Inc.'s call.
3. Rolling with the weather
Weather closures affected the financial results of some of the education companies in the first quarter. Career Education Corp. chief executive Scott Steffey noted that the especially cold and snowy weather at the beginning of 2014 affected even the traditionally warm southern states, leading to 96 weather-related closures and delays for Career Education campuses — including those in Dallas, Houston, and Atlanta. Besides creating hardship for current students, the weather made it difficult for prospective students to meet Career Education advisors and tour campuses.
Strayer Education reported that weather interruptions cost it 7% of its operating capacity. If not for the weather closures, its new student numbers would have grown 10% for the spring term instead of the actual 1%.
4. Some litigation continues, some ends
Not a new story, but Career Education reported that it will cooperate with the recent inquiry of several publicly traded education companies by 12 state attorneys general regarding recruitment, graduate job placement statistics, graduate certification, and licensing, student loans and other business practices. The other companies in the probe: Corinthian Colleges Inc., the Education Management Corporation, and ITT Educational Services.
Career Education also reviewed its efforts to resolve multiple litigations: Reaching an agreement with the New York Attorney General's office, settling shareholders' lawsuit, and negotiating a preliminary settlement agreement with former culinary school students for an estimated $15.5 million.
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