For-Profit College Enrollment Drops Sharply


August 24, 2011

Are the industry’s glory days over?

It’s likely too early to tell, but The Wall Street Journal’s Melissa Korn has some numbers that don’t look good for the previously booming $400 billion a year for-profit college industry. Her striking stats on new-student enrollment declines include:

+ 25.6 percent at DeVry

+ 21.5 percent at Corinthian Colleges

+ 47 percent at Kaplan Higher Education

+ 35.8 percent at Capella Education Inc.

Korn suggests two key factors behind these numbers:

Companies have pulled back on aggressive recruiting practices amid criticism over their high student-loan default rates. And many would-be students are questioning the potential pay-off for degrees that can cost considerably more than what’s available at local community colleges.

Corinthian and the Apollo Group (the parent of the University of Phoenix), for example, have “cut back on recruiter bonuses based on factors such as how many students make it past their first term.” The Apollo Group and Kaplan now require a trial period for some students before they enroll; Capella revamped its pay structure for recruiters in January. And then there’s the heavy cloud hanging over the for-profit industry in the form of a Justice Department lawsuit against the Education Management Corporation (EDMC), alleging fraud over its recruitment practices.

As always, for background, watch our investigations on the for-profit industry, which report on both the general student population and military veterans. It’s also worth taking a look at an interview we did in 2010 with Dr. Gail Mellow, president of LaGuardia Community College in Queens. She goes into detail about cost differentials at a community college versus at a for-profit, a factor Korn says is changed the mind of at least one student who is now attending Mellow’s school:

The specter of a hefty debt load dissuaded Jason Tomlinson from enrolling to study business at Berkeley College, a for-profit school with locations in New York and New Jersey. Mr. Tomlinson, now 25, said he would have had to pay more than $20,000 per year, for four years, for that school’s bachelor’s degree program.

On Mr. Tomlinson’s $8-per-hour salary as a part-time sales associate at the Gap, “it just didn’t seem realistic” he said. “I really did not want to go into that much debt.”

Mr. Tomlinson enrolled in LaGuardia Community College, where he pays $3,600 per year for his full-time associate-degree program in business management and works at the school’s fitness center to help cover expenses.

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