For-Profit Universities Experience Plummeting Stocks and Standards

University of Phoenix sign

The University of Phoenix, as well as other for-profit universities, are struggling financially–and with the law.
Image: Ken Wolter /

Apollo Education Group Inc., owner of the for-profit University of Phoenix, has announced it’s considering selling after years of lowered profits and declining enrollment.

For-profit institutions like the University of Phoenix and DeVry Education Group are probably losing financial status due to some serious concerns about their efficacy in education. Studies in 2010 showed extremely low graduation rates and poor job prospects for students at for-profit universities.

In addition, the US Department of Education has lowered the amount of federal tuition aid it provides, squashing a significant source of income for these schools.

And it’s not just a funding crisis for these schools, either. The US Department of Defense put the University of Phoenix on probation in October, which meant no federal money for tuition and no recruiting students on military bases. The FTC had already warned that the school’s marketing techniques “may have been deceptive.” In August, the California Attorney General’s office issued a subpoena to get more information on these schools’ marketing and their use of National Guard personnel and military logos.

Financially, however, these for-profit schools are still interesting to investors, even as their stock goes down. Apollo’s stock, once at $7.70, lost more than three quarters of its value within the last year. (At it’s highest, it was at $97.93—back in 2004). In November quarter, it missed its Wall Street estimates by far. Still, financial organizations are calling Apollo a “strong on high relative volume” stock, meaning it’s worth it for investors to keep an eye on it in order to ride the wave of the latest trends.

But is education the sort of place where investors’ interests should outrank basic competency in serving students? Is it more important to fill a wallet than to fill a student’s mind effectively?

Maybe these questions are a bit simplistic, but they have their place as it becomes more evident that for-profit institutions are not living up to their word—either in terms of preparing students or satisfying investors.




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