September 26, 2021

UoP going Private


University of Phoenix selling College to Appolo Global

Apollo Education Group (APOL) will sell itself to a group of investors, which will take the company private. A former deputy secretary of the Department of Education, Tony Miller, will take the helm at a tough time. Its shares plunged 75% in 2015.

“For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance. This doesn’t need to be the case,” Miller said in a statement.


University of phoenix & nexus research first report on most efficient systems of higher education

Two years ago, the founders of the University of Phoenix announced plans that they were going to create an independent, nonpartisan research institute to examine significant educational issues affecting nontraditional students and for-profit higher education. Industry analysts, excited to get a peek into the loads of data that Phoenix and other proprietary institutions track about their students and teaching methods,were excited about the news.

The report, “For-Profit Colleges and Universities: America’s Least Cost and Most Efficient System of Higher Education,” lofts praises of the University of Phoenix and other for-profit colleges. It postures that many of the problems of the industry highlighted in Congressional hearings and flow of negative news accounts are not systemic, and also dishes an attack on traditional colleges as “studies in inefficiency.”

the full report is available here:

Apollo group’s position paper on Higher education

The Current State of Higher Education in America and the Vital Role of Proprietary Colleges and Universities

Gregory W. Cappelli Co-Chief Executive Officer of Apollo Group and Chairman of Apollo Global

America is at a crossroads with respect to how the nation’s higher education system will adapt to meet the needs of today’s learners.  

At Apollo Group, we are concerned that the country will not meet the national education goals set forth by President Obama without an adaptable postsecondary system that operates differently than it has in the past–a system that embraces diversity and innovation.

More Americans than ever need a college degree and are seeking access to higher education. 

Jobs today require higher education, yet out of 132 million people in the labor force, more than 80 million don’t have a bachelor’s degree, and 50 million adults have never even started college. These individuals are increasingly looking for ways to remain competitive and advance in their careers in today’s global economy.

Those seeking access to higher education are less prepared than in the past and require greater support.

High school dropout rates are now approximately 55% in many major cities like New York and Los Angeles. Even more concerning, many students who do graduate cannot perform at the twelfth grade level in reading or math.

Over 70% of today’s students are now categorized as “non-traditional” students.

Our colleges and universities must meet the needs of today’s learners who have families and professional obligations that make it incrementally challenging to pursue a college degree.

Traditional colleges and universities are the backbone of the U.S. higher education system, but they alone cannot meet the country’s needs.

This system, which is exclusive by design, was built to meet the needs of a different era when only a small portion of the nation’s workforce needed a college degree. Today’s globally competitive, knowledgebased economy requires a more broadly educated society.

President Obama has set forth three important goals for the U.S. higher education system which are critical to the country regaining its standing as a global leader in education.

 On a sobering note, we estimate that without proprietary schools, meeting these goals would cost U.S. taxpayers more than $800 billion over the next ten years.

Accredited, degree-granting proprietary institutions, which have been a strong source of innovation, play a critical role in the future of education.

These institutions provide access to students who previously have been left behind by or excluded from the traditional higher education system. Well managed proprietary institutions can meet the demand for education at a significantly lower cost to society.

Link to the complete white paper:[1].pdf

Apollo pre-announced results fiscal 2Q10 results, lowers estimates

Apollo pre-announced results fiscal 2Q10 results, with EPS from continuing operations lower than our and the consensus estimate. 2Q10 EPS from continuing operations is expected to be $0.77-0.82 versus the consensus estimate of $0.94.

The pre-market announcement apparently is due to

 1) higher than expected bad debt expense,

 2) greater than expected investments in BP Holdings, the European education company that Apollo recently acquired.

Expected bad debt expense surged well above estimates as a % of revenue of 6.8-7.1%(a ~280 bps increase YoY) is higher than our estimate of 4.7% (a ~60 bps increase YoY). The lower than expected Q2 EPS also reflects a loss per share from BPP Holdings. Apollo has authorized a $500M incrase in the share repurchase program. The size of the share repurchase authorization program is now close to $800M.

The company will hold its 2Q10 conference call on March 29.

EDU stocks continue to get hit

Clearly the EDU stocks are continuing to get hit.  Apol is leading the downward trend, but the others are following.  Many of the analysts I speak with are still concerned about pending legislative changes…  Thought they all agree that for the most part on the state level the for-profits are welcomed, but at the federal/national level they don’t feel the love.  I have to say it is interesting to hear the “end is near” fears from a number of them, while the vast majority believe it is all much to do about nothing!

Apollo Group gets hammered due to SEC inquiry!

Apollo group is getting hammered today due to its announcement of the SEC inquiry yesterday.  I would have to agree with JPM & Piper Jaffray’s view on this and believe the market is once again over reacting to EDU news…  Their EPS & Enrollment are above expectations & their retention has continued to improve.  In addition they seem to be closer to finally resolving the Qui Tam case.  Unfortunately (except to those who are buying) it looks like the panic is setting in again.  If it proves to be anything I would doubt it to be is a significant.

Education committee hearing of the U.S. House of Representatives

 If U.S. education officials follow through on their assurances to lawmakers Wednesday, higher-education institutions that participate in federal student aid programs could face a lot more scrutiny in how they enroll students.

 At an education committee hearing of the U.S. House of Representatives, an Education Department official and a government investigator vowed to go after institutions that enroll unprepared students through fraud and abuse. The hearing was held in response to a report, released last month from the General Accounting Office, showing that a few propriety institutions gave students answers to tests so that they would be eligible for Title IV student aid. In other cases, the report said, institutions encouraged students to obtain high school diplomas through diploma mills so the students could secure federal loans.

 Robert Shireman, deputy undersecretary at the U.S. Department of Education, said his office agrees with the report findings. The department is bolstering its communication with other government agencies to help identify illegal activity and revamping how it reviews institutions that participate in federal student aid programs, he said.

 He offered as an example the following: the department now adds and extracts information about consumer complaints from the Federal Trade Commission; the department has created a database that allows student complaints to be referred to law enforcement officials, and the department is using more targeted auditing and investigative techniques to identify suspect institutions.

 “The goal is strengthening the integrity of financial aid programs,” Mr. Shireman said.

 Mary Mitchelson, acting inspector general of the U.S. Department of Education Office of Inspector General, said her office will continue to investigate fraud regarding the tests that determine eligibility for Title IV student aid (referred to as an Ability-to-Benefit or ATB test), and on-line high school diploma mills.

 The hearing took a dramatic turn when George Scott, director of education, workforce and income security issues for the Department of Education, played an audio recording of a test administrator giving students answers to the ATB test. “Mark it ‘C’ on the paper,” the administrator is heard telling students.

 Lawmakers at the hearing expressed concern over the GAO report findings.

 Rep. George Miller, a California Democrat, said the tactics that some institutions use to lure students to federal aid programs reminded him of the deceit that occurred during the recent housing market scandal.

 “It looks a lot like subprime student loans,” he said.

 Other lawmakers urged education officials not to label all proprietary institutions or the students who attend them as disreputable.

 Rep. Brett Guthrie, a Kentucky Republican, praised a proprietary school in his district, Sullivan University.

 “Proprietary schools like Sullivan University have a history of offering quality educations to students in a variety of fields,” he said. “These institutions also have a history of educating underserved populations, including those in rural and urban areas where students have very limited options for job training.”

 Harris Miller, president and CEO of the Career College Association, reiterated that sentiment.

 “Just because we have non-traditional students,” he said “doesn’t mean they’re not successful students.”

 —- Andrea L. Foster

Experts say Online learning give students a “modest but statistically meaningful difference” in learning performance


Recently a 93-page report on online education, conducted by SRI International for the Department of Education, has delivered an interesting conclusion: “On average, students in online learning conditions performed better than those receiving face-to-face instruction.”  The New York times reported the article here: New York Times

Whens the next wave of acquisitions comming?

I have heard a few rumors but wanted to see what you think. 2002-2003 was suck a massive year for acquisitions but we haven’t seen a boom year (regarding acquisitions) since. Whose ripe for the picking?  Whens the next roll-up coming out?  There are so many nice mid-sized private for-profit schools out there just lining up for the picking…

Apollo & their Cohort Default Issue

Much has been said over the last week regarding apollo and the manner in which they deal with their drops.

A complaint alleges that with regard to students who dropped from their courses shortly after enrolling, University of Phoenix improperly returned the entire amount of the students’ federal loan funds to the lender.  Therfore improperly inflating their default rate.

While I disagree with the practice, I do not believe its a door closer… and it’s not another EVCI

others however are much more bearish.

By far the most bearish viewpoint are:



Seeking alpha:

What do you think?