For-profit col­leges see en­roll­ment slide

Industry un­der scru­tiny af­ter ITT Tech col­lapse

Daily Local News (West Chester, PA) - - BUSINESS - By Collin Binkley

Some of the na­tion’s largest for-profit col­leges are suf­fer­ing steep de­clines in en­roll­ment amid grow­ing com­pe­ti­tion, new reg­u­la­tion and gov­ern­ment pres­sure that led to the col­lapse this month of one of the industry’s big­gest play­ers, ITT Tech­ni­cal In­sti­tute.

The industry has been los­ing stu­dents for the past six years, but the cri­sis ap­pears to be deep­en­ing with alarm­ing speed. In their lat­est cor­po­rate fil­ings, some schools re­ported a pro­nounced drop.

En­roll­ment at the Univer­sity of Phoenix chain fell 22 per­cent this year, to 171,000 stu­dents, mark­ing a 70 per­cent loss since 2010. DeVry Univer­sity re­ported a 23 per­cent drop this year, to just un­der 26,500. Hon­dros Col­lege, a chain of nurs­ing schools, slid 14 per­cent.

Mean­while, com­mu­nity col­leges are reap­ing the ben­e­fits.

In Colum­bus, Ohio, Beth Kulp with­drew from ITT Tech when she heard it was in trou­ble. She con­sid­ered other nearby for­profit col­leges but feared they might close, too, so she trans­ferred to Colum­bus State Com­mu­nity Col­lege.

“I didn’t want to waste any time or money just to end up where the stu­dents at ITT ended up — with noth­ing,” said Kulp, 34, who is study­ing to be­come a nurse.

For-profit col­leges un­der­went years of rapid growth be­fore see­ing their for­tunes change. With jobs more plen­ti­ful, fewer adults are go­ing back to school, ex­perts say. Tra­di­tional uni­ver­si­ties have lured stu­dents away with new on­line pro­grams.

And the Obama ad­min­is­tra­tion has cracked down on for­profit col­leges amid al­le­ga­tions many were us­ing ag­gres­sive re­cruit­ing tac­tics, ly­ing about the suc­cess of their stu­dents, push­ing them into risky loans and leav­ing them sad­dled with heavy debt and few job prospects.

Of­fi­cials at many of th­ese com­pa­nies had no com­ment. But Steve Gun­der­son, pres­i­dent of Ca­reer Ed­u­ca­tion Col­leges and Uni­ver­si­ties, an industry lob­by­ing group in Washington, said some schools are in dan­ger of col­laps­ing, in part be­cause of “the in­cred­i­ble eight-year regu-

la­tory, ide­o­log­i­cal as­sault by the ad­min­is­tra­tion and their al­lies.”

Un­der the up­dated fed­eral rules, schools can no longer pay re­cruiters bonuses based on the num­ber of stu­dents they en­roll. The gov­ern­ment has vowed to cut fund­ing to aca­demic pro­grams if their

grad­u­ates don’t find jobs that pay well. And a new pro­posal would force col­leges to re­pay stu­dent debt if they’re found guilty of fraud.

Last month, the Ed­u­ca­tion De­part­ment barred ITT Tech from en­rolling new stu­dents on fed­eral fi­nan­cial aid and or­dered it to put up $152 mil­lion as a kind of in­sur­ance in case it went out of busi­ness. The money was to be used to cover stu­dent re­funds and

other li­a­bil­i­ties.

ITT re­acted by clos­ing all 130 of its cam­puses in 35 states, leav­ing 35,000 stu­dents in the lurch and throw­ing 8,000 peo­ple out of work.

It was the se­cond ma­jor chain to top­ple un­der gov­ern­ment pres­sure. The 72,000-stu­dent Corinthian Col­leges group agreed to sell or close its more than 100 cam­puses in 2014 amid fraud al­le­ga­tions.

Other chains have been

ac­cused of de­cep­tion in scores of law­suits and in­ves­ti­ga­tions, in­clud­ing DeVry and the Univer­sity of Phoenix. One ef­fect: The Univer­sity of Phoenix saw the num­ber of new stu­dents fall 38 per­cent this year.

Some schools say en­roll­ment has also been hurt by a dis­pute that could cause hun­dreds of for-profit schools to lose their ac­cred­i­ta­tion — and with it, their el­i­gi­bil­ity for fed­eral

fi­nan­cial aid. Fed­eral ed­u­ca­tion of­fi­cials are con­sid­er­ing whether to cut ties with the Ac­cred­it­ing Coun­cil of In­de­pen­dent Col­leges and Schools, which is ac­cused of over­look­ing mis­con­duct at some col­leges.

To cope with the dropoff in en­roll­ment, some for­profit chains are scal­ing back. Since 2014, DeVry has closed 39 cam­puses and plans to shut­ter more in the up­com­ing year.

But some are start­ing to

take cues from tra­di­tional uni­ver­si­ties, of­fer­ing more schol­ar­ship money and fo­cus­ing on im­prov­ing their grad­u­a­tion rates, said Kevin Kinser, an ed­u­ca­tion pro­fes­sor at Penn­syl­va­nia State Univer­sity who stud­ies the industry.

“What they’re do­ing is in­vest­ing in stu­dents so that stu­dents have pos­i­tive out­comes,” he said. “Be­fore, they were fo­cused on lob­by­ing their way out of the prob­lem.”


Some of the na­tion’s largest for-profit col­lege chains are suf­fer­ing steep de­clines in en­roll­ment amid heav­ier gov­ern­ment scru­tiny. DeVry Univer­sity says the num­ber of stu­dents tak­ing classes is down 23 per­cent this year, and the Univer­sity of Phoenix is off 22 per­cent.

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