Strayer Education, Inc. Staying Above the For-Profit Fray, For Now
Posted By Donna Fuscaldo on February 8, 2016 at 11:26 am
To say for-profit higher education institutions are under scrutiny would be an understatement. With an investigation into DeVry Education Group underway and last year’s closing of Corinthian Colleges, there are a lot of concerns about the quality of education that profit-schools provide. That has led to declining enrollment at many schools, which in turn translates into depressed share prices for the publicly traded ones. But one for-profit seems to be riding out the storm, at least for now: Strayer Education Corp.
For its fourth quarter, the for-profit education provider reported that total enrollments for the winter term increased to 40,872 students, from 40,728 students in last year’s winter term. New student enrollments decreased by 5 percent, but continuing student enrollments increased by 2 percent. While the for-profit did report a 2 percent decline in revenues year-over-year, it is faring better than some of its peers that have seen double-digit declines in enrollment and are being hit by federal investigations and inquiries. According to the Education Department’s National Center for Education Statistics enrollment at for-profits decreased more than 16 percent between the 2011-2012 and 2013-2014 school years. Enrollment at the University of Phoenix has
According to the Education Department’s National Center for Education Statistics enrollment at for-profits decreased more than 16 percent between the 2011-2012 and 2013-2014 school years. Enrollment at the University of Phoenix has more than halved since 2010 (from 470,800 students to just 214,000 in 2015). Numbers are also down at Education Management Corporation, operator of Argosy University, Brown Mackie College, The Art Institutes and others, as well as DeVry University, Career Education Corporation and Kaplan University. “When it comes to Strayer, it seems a little bit more nimble,” says Jason Hall, contributing writer and editor at The Motley Fool. “If they had growth initiatives that weren’t panning out, they wouldn’t step up their resources in those areas.” Strayer did not return repeated calls and emails for comment.
Scrutiny on for-profit schools hurting enrollment
One of the big knocks on for-profit schools is that they charge a lot of money but leave many graduates without the necessary skills to land a job. They have also been under attack for aggressive marketing practices and inflated job placement numbers. That has muddied the waters, making it hard to predict which institution will run into trouble next. “We would be kidding ourselves if we could predict which for-profit colleges are built to last and which ones are the next to go,” says Mark Huelsman, senior policy analyst at policy think tank Demos. “There was a lot of good publicity about DeVry for a very long time, and DeVry’s job placements rates are unclear.”
Late last month, the Federal Trade Commission filed suit against DeVry, alleging that the for-profit’s claim that 90 percent of graduates actively seeking employment get a job in their field within six months of graduation was deceptive. What’s more, the FTC also says DeVry’s claim that its graduates had 15 percent higher incomes one year after graduation than graduates of all other colleges and universities is deceptive.
Strayer benefits from corporate partnerships
What industry watchers say are partly helping Strayer? Its partnerships with local employers. Taking a page from trade schools, Strayer collaborates with employers to ensure they are matching the courses with the needs of local businesses. Those kinds of relationships are common at coding boot camp schools, which meet regularly with local employers to find out what they are looking for in employees.
“Strayer, in particular, has a lot of partnerships with employers that provide tuition assistance for job retraining,” says Huelsman. “They seem to be linking with employers in ways other for-profits haven’t.” But it’s not only the corporate partnerships that are helping. Strayer has also carved a niche in healthcare with its nursing program, which a lot of the other for-profits don’t have, says Hall. And earlier this month, Strayer announced that it acquired New York Code and Design Academy, which provides non-degree web and mobile app development courses, as it expands its offering in adult education.
According to Zacks Research, Strayer is also benefiting from moves to cut tuition rates and introduce graduation funds that cover up to $14,200 of the tuition. “What we’ve seen with Strayer versus some of the others from a management perceptive is they haven’t been so huge and aggressively trying to grow,” says Hall.
Competition and stricter rules could hurt for-profits
Strayer University may be doing better than some of the other players in the for-profit space, but that doesn’t mean it’s smooth sailing going forward. For one thing, for-profits are facing increased competition from public colleges and universities, which are making a bigger push to go after non-traditional students by expanding their online offerings. Not to mention, with the recent crackdown on for-profits schools, Strayer’s reliance on financial aid could come with more strings attached. According to Zacks Research, Strayer gets a major portion of its revenue from federal student financial aid programs. “It’s going to be a lot harder for any for-profit,” says Hall. “Strayer is the least worst of the for-profits.”