Strayer Education Inc (NASDAQ:STRA) has not had the same legal issues as Bridgepoint, but its business is declining. This past November, it suspended its dividend. The company also announced it would raise its tuition prices by 3% effective January 2013. With the meteoric rise of tuition over the past 25 years, a graduation rate of only 15%, and a 5% decrease in enrollments, these two steps will not save the company. Because of this, Strayer earns a “D” for desperate effort.
Apollo Group Inc (NASDAQ:APOL), the largest in terms of market capitalization, offers online and on-campus education services covering undergraduate, graduate, and doctoral levels of education. Through its University of Phoenix and Western International University campuses, Apollo serves more than 300,000 students worldwide. With the percentage of Americans holding university degrees at all-time highs, you might think Apollo Group Inc (NASDAQ:APOL)’s business would be booming, but that would be incorrect. In January, the company reported a 15% decline in student sign-ups; the third quarter in a row to see falling enrollments. For that reason, Apollo Group receives a “D”.
DeVry Inc. (NYSE:DV) separates itself from the rest, having recently announced that its enrollments for medical students were up 12.7%. DeVry’s strategy of focusing its programs on high-growth industries, coupled with cost-cutting measures, shows a willingness to adapt to market and employment conditions. Because of its pragmatic approach to a changing landscape, DeVry Inc. (NYSE:DV) earns a “B”.
ITT Educational Services, Inc. (NYSE:ESI) also reported a drop in enrollments, falling 11% in Q4 2012, and guided below analyst expectations for 2013. To make matters worse, ITT’s costs increased 30% over that same time period. The weak economic situation and high unemployment rates may have a hand in this, but something else may be at work: massive open online courses. Due to its inability to control costs and reluctance to adapt to the changing environment, ITT receives a “D”.
No more pencils, no more books…
The education landscape is changing rapidly and traditional education companies must adapt if they want to stay relevant. Unfortunately, I do not believe the future is very bright for these for-profit companies. Especially with rising tuition rates, the price of MOOCs just can’t be beat. The final nail in the coffin will be when businesses start to partner up with the MOOCs and offer a path to employment through their courses. When that happens, school’s out for good.
The article Education is Changing, Are You Ready? originally appeared on Fool.com and is written by Kyle Campbell.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
