Subprime College Crash Continues Under the Radar

The subprime college crash continues for the seventh consecutive year with little attention from the government or media.

Subprime is a more appropriate name than for-profit, because several non-profit schools offer limited value at a high price. Campus closings, steep decreases in enrollment, low student loan repayment rates, low graduation rates, and low returns on investment are strong  indicators of "subprime."

University of Phoenix, now part of Apollo Global Management, continues to close campuses. In total, they have closed more than 450 campuses and learning sites. I expect UoPX to close half of their remaining campuses in the next 12-18 months.

Art Institutes are closing most of their campuses in 2018 after being taken over by Dream Center Education Holdings.  David Halperin has been covering the story in the Huffington Post, but it has received little attention.  Argosy University, another system of DCEH schools, is teaching out at least 14 campuses.




DeVry University will be closing more campuses after their parent company, Adtalem, dumped their brand and practically gave it away to Cogswell Education/Palm Ventures. They have already closed eight sites in 2018. Over the past few years, DeVry has closed 44 of their 90 learning sites.

National American University (NAUH) is in major trouble. Their stock price has been struggling at $1 a share, making it vulnerable to delisting. T. Rowe Price is keeping it propped up. NAUH recently mortgaged their real estate for $8M.



Zenith (ECMC) is completely out of subprime college ownership. The former Corinthian Colleges was propped up by the non-profit student loan company with help from the government.

Kaplan University is now operating as Purdue University Global. But the school remains a subprime effort despite fraudulent claims that it offers a "world-class education."

Ashford University (Bridgepoint) continues to profit amidst state and federal investigations, but enrollment is down as it pursues non-profit status.

Strayer is buying out Capella. The new company is still STRA, but it's known as Strategic Education.

Private College Revenues and the US College Meltdown

#CollegeMeltdown

According to National Center for Education Statistics charts, public higher education institutions overall experienced increased revenues in recent years, but private colleges saw a $46 Billion loss in revenues from 2013 to 2015.

Bear in mind that the numbers are not up-to-date, so this pattern may have improved, stabilized, or worsened since 2016. But with student enrollment continuing to decrease, declining private college revenue numbers may be a harbinger of a larger meltdown.

In 2016, EY suggested that as many as 805 colleges faced significant challenges due to low enrollment numbers and unsustainable finances.

Some of private college revenue losses may due to a tuition discounting. In any case, drops in institutional revenues for a significant period require cost cutting, which frequently means cuts in teachers and staff. Conditions at individual private colleges may be vastly different, from thriving and growing to downsizing and closing.