Dropping Profit

Career College Central Summary:

  • Declining revenues and an ongoing regulatory crackdown has led to speculation that some in the sector — including one of the major, publicly traded companies — will go nonprofit to get out of the crosshairs.
  • Yet that transition isn’t easy or practical for most for-profits. Just four have successfully changed their tax status in recent years, sources said. And those institutions appear to have made the jump mostly for reasons other than avoiding the Obama administration’s proposed “gainful employment” regulations or a current rule that for-profits can get no more than 90 percent of their revenue from federal sources.
  • The four for-profits that made the transition were all privately held and relatively small, at least compared to the dozen or so behemoths that dominate the public discourse about for-profit higher education. Keiser University, a Florida-based chain, is the most prominent of the group. Others include Stevens-Henager College and Remington College. (Inside Higher Ed wasn't able to learn the name of the fourth.)
  • Sources said four other privately held for-profits were also seeking to make the move. They did not name those institutions. The main motivators for private for-profits to go nonprofit are typically to cut losses and get out of a struggling business or an unusual circumstance — such as succession planning for a family operation, in Keiser’s case.

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