What DeVry's earnings say about the for-profit college business

As for-profit colleges learn to survive with fewer students, the rise of free online courses raises new questions.

The earnings parade continues. Today’s marchers include DeVry Inc., which releases third quarter results after the close.

Pretty much all the for-profit colleges are having trouble recruiting students, as more people question taking on a lot of debt in an uncertain economy. The industry continues to face a steady stream of bad PR. DeVry itself recently announced it is under investigation in two states for its marketing practices.

DeVry has a better reputation with employers than many of its competitors, says Corey Greendale of First Analysis, and enrollment has started to improve. 

“We expect not necessarily that they’re going to be blowing the doors off," says Greendale, “but that they’ll continue that trend of gradually working their way back.”

Many elite universities have been moving into online education -- traditionally the turf of for-profit colleges. Schools like Stanford and MIT are offering what are known as Massive Open Online Courses, or MOOCs, for free.

Most of them don’t offer credit -- yet, says Kevin Kinser, associate professor at the State University of New York at Albany.

“If MOOCs really do take off, then the ability of the for-profit sector to continue to use distance education to drive their profits I think is going to be limited,” says Kinser.

Another threat on the horizon: Last week, Barack Obama's administration said it will try again to write rules that hold career colleges accountable for their students’ success.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.


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