Investopedia: Apollo Off Key For Growth Investors

These are challenging days for the for-profit education market. Although a tough job market may suggest a larger pool of potential students, education companies are up against a formidable set of challenges. Education has gotten increasingly expensive (pricing some out of the market), the job outlook may lead people to think further education is pointless, and new government regulations have these companies reconsidering and adjusting their admissions and promotions policies.


With that backdrop, it is not altogether surprising that Apollo Group (Nasdaq:APOL) is struggling. While the long-term view on this company is still quite positive, the institutional investors that move markets these days are not famous for patience and the near-term outlook is troublesome.

A Tough Third Quarter
Apollo did reasonably well, relative to expectations, but the company's absolute fiscal third quarter performance was not very strong. Revenue fell close to 8% this quarter, as starts dropped about 40% and enrollment fell about 16%. Apollo saw the biggest drops in its associate programs, but there really wasn't an area of strength. While these declines were already in the analysts' models (and caused at least in part by new orientation and admissions models), it is still a major interruption in the company's growth trajectory.



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Investopedia: After Sound And Fury, For-Profit Educators Get A Break

Investors in for-profit education companies like Apollo Group (Nasdaq:APOL), Strayer (Nasdaq:STRA) and DeVry (NYSE:DV) may wonder if Washington, D.C. is more like Oz these days. There was a great deal of roaring and rumbling from the Department of Education over the past year or so about the shortfalls in the for-profit education market (high default rates, excessive tuition and debt relative to earnings prospects, etc.) and a lot of threats that the sheriffs were coming to clean up the town. 

As it turns out, all they really brought with them were water guns.


New Gainful Employments Regulations Look Soft
The Department of Education finally realized its new "gainful employment" (GE) regulations for the for-profit education industry during the first week of June. Going through the 436-page document (and yes, it was as exciting to read as it probably sounds), it is pretty clear that, for all of the sound, fury and posturing from the federal government about cracking down on these companies, very little is likely to actually change. 



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Payback Time In For-Profit Education

Monday was a severe bloodletting for many players in the for-profit education sector. While the U.S. federal government had made no secret of its intentions to reform its approach to the industry, there were not a lot of details previously in play. Late on Friday, August 13, though, the government released data about loan repayment rates in the industry and the data was not pretty. 

The Government Wants Its Money Back
There has been an ongoing debate as to whether or not the surge in for-profit education over the last 20 years has benefited students and society nearly as much as the operators. Specifically, critics have pointed to programs that leave graduates ill-prepared to get better jobs and program costs that exceed the likely earnings benefit of the education. Said differently, these programs rely upon government-subsidized loans for a  large percentage of their revenue, but students are often unable to repay the loans. 


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