State of the Union in the For-Profit Industry

The new administration is in their first 100 days.  So, what is the State of the Union in the for-profit industry? Things are looking up for the beleaguered for-profit industry in 2017.  That is at least what Wall Street thinks. On November 9th, 2016, the day after Trump was elected, stock prices started immediately heading north. Since the election, Strayer University has seen a 35% increase, Grand Canyon University a 34% increase, Devry a whopping 46% increase, and Laureate University has gone public. What else has happened in the industry since then that is having an impact on the State of the Union for the for-profit industry?

Impacts on the Industry:

  • The dismantling of the Accrediting Council for Independent Colleges and Schools seems to be a reality. They lost their latest appeal late last month. Unless someone steps in like DeVos, their fate is sealed. Schools have 18 months to find a replacement if possible and the clock is ticking. Dennis Griffith whose family has owned Trumbull Business College in Ohio for 40+ years said, “ACICS’s inability to no longer accredit higher education institutions forced us into seeking a new accreditor and that process has created a substantial financial and administrative burden that, as a small college, we just cannot bear.” They are shutting their doors in the coming months and many others will suffer the same fate.
  • Last Monday, The Department of Education took the first step to protect the for-profit industry.  They extended the deadline and are allowing schools more time to appeal releasing data related to the Gainful Employment Rule. The rule is in place to keep graduate rates and debt related to college education in check. The State Department says it is “to allow the department to further review the Gainful Employment regulations and their implementation.” Most believe it is the first step in doing away with it all together.

The good news for the State of the Union in the for-profit industry is that clearly those that are investing in the for-profit sector see it is on an upward trajectory. This is the first time since 2008. If Gainful Employment regulations are either dismantled or the standards lowered, this will also be a big win for the colleges and universities. The end of ACICS, will have a short term negative impact.  However, for those that have alternative accreditation in place or a plan to replace, it will be just fine. This includes all or most of the biggest players in the industry.

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