The University of Phoenix, the for-profit college owned by the Apollo Group, had a very significant enrollment decline in the wake of bad press and upcoming federal rules about student debt. According to an article by Jahna Berry in the Arizona Republic:
Student enrollment at University of Phoenix parent Apollo Group nose-dived 42 percent in the three months that ended Dec. 30, and on Monday investors learned that company executives believe it is only the beginning.
The Phoenix-based company expects those figures to fall as much as another 40 percent next quarter, and Apollo could continue to see steep declines for the rest of the year, executives said.
The company also made less money, but profits did appear to decline quite as dramatically as enrollment. In part this appears to be due to tuition hikes. Apollo also laid off 700 employees last month. The company reported a first-quarter income of $235 million. That’s down two percent from the first-quarter earnings a year ago.
According to Apollo CEO Gregory Cappelli, there’s no reason for his investors to worry:
This is a volatile time with many questions about the (education) sector and its growth prospect and our position within the sector. But we continue to believe that we are making the right decisions now to position the company for higher quality and more long-term growth.
How reassuring.
The University of Phoenix is actually not expected to be officially restricted by coming federal regulations, which will likely make for-profit schools ineligible for federal financial aid if average graduates need to spend more than 8 percent of starting salaries to service student loans. This is because most graduates of the University of Phoenix are actually financially able to service their debt.
The trouble is that increasing scrutiny of the industry makes all for-profit colleges seem less attractive to potential students. [Image via]
