Wednesday, October 23, 2013

For-profit Higher-Ed Companies Laying Off Employees after Declining Enrollment

Two major for-profit higher-education companies, the Apollo Group (parent of the University of Phoenix) and the Education Management Corporation, (Argosy University, the Art Institutes, etc.), have announced that they are each laying off 500 nonfaculty employees each. Apollo’s flagship school, the University of Phoenix, had an 18-percent annual drop in enrollment and a 36-percent annual decline in operating income in the last year. Education Management reported a loss of $268 million for the 2013 fiscal year and reported a $1.51 billion loss in 2012. Nevertheless, Barron’s reports that major investment firms are bullish about Apollo’s stock because of the company's cost reduction plans (laying off employees). The Motley Fool, on the other hand, is unimpressed with Apollo’s 25% stock jump, saying that the gain is a better reflection of optimizing a declining business than real growth. Apollo has also announced that it will focus on certificate and nondegree programs.

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