US private provider loses ground in 'volatile time'

January 20, 2011

Enrolment at institutions operated by one of the largest for-profit providers of higher education in the US has fallen by 42 per cent over the past quarter.

The Apollo Group, which also owns BPP University College in the UK, predicted that the slump was the start of a steep decline in enrolment over the next year.

It is a turbulent time for for-profit providers, following recent congressional hearings into allegations of sharp practices by the industry.

The hearings were sparked by an investigation into recruitment tactics at Apollo's flagship University of Phoenix, carried out by National Public Radio and ProPublica, a non-profit public interest news group.

Democrat Congressman Elijah E. Cummings called the findings of that investigation "disheartening at best and infuriating at worst".

A congressional inquiry then looked at 15 for-profit institutions, including the University of Phoenix.

"Mystery shoppers" participating in the congressional probe reported that "deceptive or otherwise questionable statements" were given by every institution visited, on topics including employment prospects, graduation rates and costs.

In a briefing to investors, Gregory Cappelli, co-chief executive officer of Apollo Group, did not address the controversy directly but admitted that it was a "volatile time" for the education sector as a whole.

He noted that there had been "many questions about the sector and its growth prospects and our position within the sector".

The fall in enrolment reflected a "period of transition" for Apollo, he added, citing changes in its enrolment processes, including the elimination of any link between enrolment and the evaluation or remuneration of staff.

The drop in enrolment appears to have affected Apollo's financial position. The company reported first-quarter income of $235 million (£149 million), a drop of 2 per cent on the preceding year.

The figures reflect a trend among US for-profit providers. Strayer Education has seen its new student enrolment drop by 20 per cent, while DeVry University has reported a 5 per cent fall in national enrolment.

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