Education.  In their opinion the gainful employment rule is expected to be excluded from next

week’s education proposal.   The article outlines that the Office of Management and Budget

included a note in the Federal Register concluding that the DOE’s proposed program integrity

rules could have a major economic impact, a designation that would require the DOE to

strengthen the evidence necessary to justify the need for the regulation.  Furthermore, the article mentions

that the designation is believed to be a major reason why the DOE has (according to reports

from several sources Thursday, though unconfirmed by department officials directly) decided

to omit the gainful employment proposal from the proposed regulations expected to be

released next week.  This if the outcome follows the assumption will bring smiles to many of the faces I saw at last

weeks CCA.  Lets hope!

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.

 A cover story (http://online.barrons.com/article/SB125755384448934953.html#articleTabs_panel_article%3D1%26articleTabs%3Darticle) this week in Barron’s takes aim at for-profit colleges and universities, saying student graduation rates and default rates are worse than those at traditional colleges, and that student dropout rates are as high as those at public universities.

 ”For-profit schools like to blame dropouts and defaults on the population of poor and minorities the industry ‘serves,’” concludes Bill Alpert, the article’s author. “But the evidence doesn’t show whether the industry’s serving that population or preying on it.”

In a two-page critique released Monday, Ariel Sokol, a New York City-based analyst with Wedbush Securities, picks apart the article, describing it as sensationalized and saying the author’s analysis is flawed.

 In particular, Sokol says Alpert uses U.S. Department of Education data on drop-out rates and graduation rates for full-time, first-time students pursuing bachelor’s degrees. Yet for profit institutions serve primarily working adults who are rarely first-time students, observes Sokol.  Therefore the department data that Alpert relies on “represents a fraction of the total enrolled students,” at for-profit institutions says Sokol.

 He also says that because for-profit institutions typically have open admissions policies they are likely to have lower student retention rates. Additionally, he writes, pursing a degree as an adult is harder than as an 18-24-year old, leading to higher drop-out rates.

—-Andrea L. Foster

 The service, which started last year, allows students to take as many self-guided courses as they want for —as Straighterline’s Web site says — “less than the cost of your monthly cell phone bill.” 

 The $99 fee gives students access to course content from McGraw-Hill, 10 hours of one-to-one instructional support, and a course advisor. The business grew out of SmartThinking, a popular online tutoring service.

 What’s in it for students? A fast track, relatively inexpensive way to a college degree. Straighterline has partnered with at least four accredited higher education institutions that have agreed to accept credits from Straighterline students.

 The company Web site lists four partners: Charter Oak State College, Fort Hays State University, Lake City Community College, and Potomac College. Potomac is the sole proprietary institution.

 An article (http://www.washingtonmonthly.com/college_guide/feature/college_for_99_a_month.php?page=all) in the most recent issue of Washington Monthly traces the development and struggles of Straighterline and warns big and non-elite colleges that the Washington DC-based business could herald their unraveling.

 ”The day is coming—sooner than many people think—when a great deal of money is going to abruptly melt out of the higher education system, just as it has in scores of other industries that traffic in information that is now far cheaper and more easily accessible than it has ever been before, ” writes Kevin Carey, the author of the article. “Much of that money will end up in the pockets of students in the form of lower prices, a boon and a necessity in a time when higher education is the key to prosperity.” 

In another article (http://features.csmonitor.com/innovation/2009/10/15/the-future-of-college-may-be-virtual/), this one in the Oct. 15 edition of the Christian Science Monitor, Carey is quoted discussing Straighterline in the context of the growth in online education.

And in an opinion piece (http://www.insidehighered.com/views/2009/10/06/hess) in Inside Higher Education, Frederick Hess, of the American Enterprise Institute, cites Straighterline as one example of why President Obama’s initiative to get the government involved in developing free, online courses is unnecessary.

 —- Andrea L. Foster

ForProfitEDU.com

While I have heard of reports indicating that the risk of loosing corporate tuition reimbursement is minimal, are those accurate?  Who were polled?  HR people, they are usually the last to know.

Will the economy get so bad that people fear they will not be able to afford the monthly out of pocket costs of their tuition along with their rent, car, insurance and food?  

The search volume as well as lead volume continue to show strong demand.

What do you think?  Are you seeing anything either in support of this or to the contrary?