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Economic Recovery and the For-Profit Education Industry

Strategic Insights

— 1 min read

The corporate earnings season has been marked by mixed results, with companies like Apple Inc., Qualcomm Inc., and eBay Inc. delivering solid earnings and outlooks, while others, such as Yum Brands, Starbucks, and IBM, disappointed. However, Federal Reserve Chairman Ben S. Bernanke's semiannual report to the Senate Banking, Housing and Urban Affairs Committee highlighted the uncertainty surrounding the domestic economic recovery. Bernanke's testimony included projections for moderate growth and a decline in unemployment to 7 to 7.5 percent by the end of 2012, but also warned of the potential erosion of skills and long-lasting effects on employment and earnings prospects.

Key Takeaways:

  • The domestic economic recovery remains uncertain, with Bernanke's testimony stating moderate growth and a decline in unemployment, but also warning of the potential erosion of skills.
  • The for-profit education industry is expected to continue growing, driven by the need for workers to retool and update their skills.
  • The industry has seen a significant increase in federal aid, from $4.6 billion in 2000 to $26.5 billion in 2009.
  • There are over 165 for-profit education companies and more than 125 for-profit universities and colleges listed on Google.
  • For-profit education companies like Capella Education Co., Strayer Education Inc., Grand Canyon Education Inc., Career Education Corp., and DeVry Inc. are publicly traded, offering opportunities for investment.

Statistics:

  • The number of students attending for-profit colleges rose to 1.8 million in 2008 from 550,000 in 1998 (Source: Sen. Tom Harkin report).
  • Federal aid to for-profit colleges jumped to $26.5 billion in 2009 from $4.6 billion in 2000 (Source: Education Department).
  • The unemployment rate is expected to decline to 7 to 7.5 percent by the end of 2012 (Source: Bernanke's testimony).
  • Over 8.5 million jobs were lost over 2008 and 2009 (Source: Bernanke's testimony).

Sources:

  • Ben S. Bernanke's semiannual report to the Senate Banking, Housing and Urban Affairs Committee
  • Sen. Tom Harkin report on the for-profit education market
  • Education Department data on federal aid to for-profit colleges
  • Think 20/20 director of research Chris Versace

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