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• Understanding Gatekeeper Courses
• Tracking performance of For-Profit Colleges
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Online Education / Distance Education

Tracking the Performance of the For-Profit Universities

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There is great debate in the traditional university sector as to the merits of these institutions. Many traditionalists feel that the educational process is driven by the "for-profit" motives of these institutions. The business interests respond by saying that productivity and improved processes that successful companies implement can create a more focused learning experience for the student and yield a respectable profit. They cite the old adage: "Mission without Margin is the definition of a hobby." Even the best universities must run with a positive operating margin, the not-for-profits, by definition, are not allowed to distribute profits to shareholders. They retain this excess revenue and direct it into physical or cash reserve assets, often with little fanfare or public scrutiny.

On the other hand, publicly traded companies face a level of scrutiny far greater than most colleges. According to federal regulations, they must report very detailed and factual accounts of their performance as the general public is invited to purchase equity in these companies (stockholders). These performance reports can be found in Securities and Exchange Commission (SEC) filings, as well as stock analyst reports on the companies and the industry.

Collectively, the above-mentioned group has drawn a fair amount of coverage by stock analysts. This scrutiny can help us all understand the dynamics of the industry, and perhaps understand the dynamics that draw people to schools and how to successfully enroll them.

The Chronicle of Higher Education has created The Chronicle Index of For-Profit Higher Education which quarterly tracks the stock price and performance highlights of eight companies. One, Laureate, the parent of Walden University, has recently been taken private as has Career Education.

Here are some recently reported facts:

• For the eight for-profit colleges in the Chronicle Index, 5,985 faculty were listed as full-time and 37,249 were listed as part-time. Laureate's 13,000 faculty were not broken down.
• Stifel Nicholas follows a larger group they call Education and eLearning and makes the following observations: Enrollment growth in the recent quarter improved to 10.4% reaching double digits for the first time in eight quarters. The improving growth rates reflect program expansion, strength in the technology education sector and improvements in marketing efficiency.
• As of the Third Quarter 2007, there are 311,100 degree students at Apollo Group schools, 706,000 students enrolled at all publicly-traded companies (without Laureate) and just short of one million students in this sector (including Laureate).
• Over capacity may be reaching the sector as faculty and facility utilization rates are decreasing. Currently the industry averages 78.9 square feet per on-ground student. Class size has dropped, a weakness in the eyes of investors.

Note, this does not include Kaplan Colleges, part of the Washington Post Company (WPO) and several private universities like Grand Canyon University, Ashford University and Post University that have been purchased and moved from non-profit to for-profit. More of these conversions to for-profit institutions are pending.

Eduventures, Inc, a Boston-based research firm, states that nine percent of all U.S. college and graduate students attend for-profit institutions.

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Additional sections of this journal address student recruiting and student retention. We have also placed all articles with a common theme of Innovative Practices in Communicating with Students in a separate portal. New articles will be posted each Monday, please check back by bookmarking this site or placing a link to this online education and distance education programs portal.

Mark Shay is the founder of EDU - a leading academic advertising provider, - part of Halyard Education Partners, a leader in student lead generation and enrollment management services.