September 27, 2021

Career Education gets slammed, CEO resigns

CECOShares of Career Education Corp plunged 42 percent to their lowest in more than 10 years on Wednesday, a day after its chief executive resigned amid findings of improper placement practices, and increased accreditation risks.

The company also reported disappointing quarterly results 10 days ahead of schedule and said the decline in new student sign-ups will not improve in the near term.

At least two brokerages downgraded the stock to their lowest rating citing too many near-term risks.


Though the company did not tie the placement discrepancies to McCullough’s departure, analysts say he was kicked out for that very issue.

“The compliance issues were probably the main driver behind the CEO resignation,” analyst Dobell said. “An issue with compliance and honesty, particularly given McCullough’s background, was probably more than the board was willing to tolerate and more than McCullough was willing to stand for.”

McCullough was well respected and credited for cleaning up Career Education’s reputation and streamlining its operations, according to Robert W Baird analyst Amy Junker.


Moneycollege: Where is the Billy Beane of Higher Education?

Interesting article from University Ventures Fund:

If you’ve seen Moneyball, the new baseball film about the unlikely success of the Oakland A’s and their out-of-the-box-thinking General Manager Billy Beane, you may have already drawn parallels to the current state of higher education. If not, we’re pleased to do it for you!

Like baseball ten years ago, higher education is focused on what’s easy to measure. For baseball it may have been body parts, batting average and the number on the radar gun. For higher education, it’s the 3Rs: research, rankings and real estate. Each of these areas is easily quantified or judged: research citations or number of publications in Nature and Science; U.S. News ranking (or colleges choose from a plethora of new entrants to the ranking game, including the international ranking by Shanghai Jiao Tong University); and in terms of real estate, how much has been spent on a new building and how stately, innovative and generally impressive it appears.

Unfortunately, the 3Rs correlate about as closely to student learning and student outcomes as batting average or fastball velocity, which is to say, not at all. Buildings are the “ugly girlfriend” of higher education.

Universities that continue to focus on the 3Rs in the wake of the seismic shifts currently roiling higher education (state budget cuts, increased sticker shock, technology-based learning) are either not serious about improving student learning and student outcomes, or they’re like the baseball fan who has lost her car keys in the stadium parking lot at night: Where does she look for them? Not where she lost them, but under the light because that’s where she can see.

To read the entire article:

A call with an industry short fund


Last week we spent some time on the phone with a well-known industry short fund.  We discussed the industry as a whole, as well as specific issues facing the industry which were behind their premise that shorting the industry was a good play for the next few years. Topics such as gainful employment, new compensation rules, default rates and the power of non-profit brands extending into the online education were the main points.  Gainful employment in conjunction with 90/10 is in our opinion a biased illogical political move to hinder the growth of one industry segment for profit schools to the benefit of another nonprofit schools.  If the rule is sound & logical, why wouldn’t it

be industry wide, the answer is clear, it’s not a well thought out rule.  If the traditional colleges had to live within gainful employment you would see far fewer lawyers, doctors, economists, political scientists (maybe that’s a good thing) philosophers, literary scholars, teachers, artists, theorists etc.  Who’s going to fill the entry level positions?  Aren’t they stepping stones?  We guess they will be filled by graduates of traditional colleges with English, Liberal Arts & Art history degrees whose $200,000+ education clearly provided them with such a solid and relevant foundation.  Default rates, well they need to be managed, schools need to ensure that the engagement & value their student receive from the education provided them is compelling.  We need to utilize assessment to make sure students enter program they have real interest and a likelihood of success in.  And we need to screen for and provide the remedial assistance necessary for students to be able to be successful in their education.  Will the industry be able to manage them successfully, YES.  As for the value of brands, this is a topic which has been discussed for many years.



We all know a brand is valuable.  We all know having a brand is a huge advantage and can significantly reduce the marketing costs of student recruitment.  But the big caveat is “can”.  Most traditional colleges significantly lack the admissions infrastructure and wiliness to adapt as necessary to be competitive to succeed in the fast paced world of online  education.  The partnerships between traditional colleges and for profit enterprises have proven that they can work and achieve fast growth, but those are still few in number.  The real questions is when will we see an influx of these partnerships, and how much of an effect will they have on the for-profit EDU industry>


Debt to Degree a new report correlating debt & degree completion

Education Sector has created such a measure, the “borrowing to credential ratio.”For each college, we have taken newly available U.S. Department of Education data showing the total amount of money borrowed by undergraduates and divided that sum by the total number of degrees awarded.

The results are revealing:

• Nationwide, the overall borrowing to credential ratio has risen sharply in recent years.

• Certain segments of the higher education industry—in particular, for-profitcolleges—are racking up far more student debt per degree than others.

• State policies matter a great deal, with seemingly similar public university systems achieving widely varying results for students.

• Among elite colleges and universities, some are making good on their pledgeto help low- and middle-income students graduate without major financialburdens while others are riding a wave of student debt to fame and fortune.

Keep in mind that this formula does not take into account the enrollment growth and thus lack of time for those new students to graduate, thus in many of the for profits case their number are artificially high as if they added 5000-35000 new students their numbers are significantly elevated due to their newness and do not reflect actuals.  This is a decent indicator for those schools with consistent flat enrollments

managing-student loan-debt

but not for those with rapidly changing enrollments.  Thus, those schools with declining enrollments may show better that actual results while those with enrollment growth will show higher inaccurate debt amounts.

 click here to viewreport: