Grand Canyon Education May Convert to Nonprofit Entity

Career College Central Summary:

Grand Canyon Education Inc. said the for-profit education provider will consider converting to a nonprofit entity.
The company said that management wanted to explore the possibility of a conversion, and said a committee of independent board members will “explore options aimed at enhancing stockholder value.”
Grand Canyon said a conversion would enable it to “conduct itself in the future as a traditional nonprofit university on a level playing field” with traditional universities.
Grand Canyon shares were up 10% to $47.50 in late trading.
Chief Executive Brian Mueller said in a letter on the website of the company’s Grand Canyon University said the school “looks and acts like a traditional private university or state university in almost every way.” Mr. Mueller said “the stigma surrounding the for-profit industry—some of which is deserved, and some not —is real and it is not improving.” The letter was reported earlier by the Phoenix Business Journal.
The for-profit college sector has received regulatory scrutiny lately. ITT Educational Services Inc. disclosed in September that it got a Wells notice from the Securities and Exchange Commission in connection with two loan programs for its students. ITT said it would defend itself vigorously.
Meanwhile, the Consumer Financial Protection Bureau sued Corinthian Colleges Inc. in September, alleging the company prodded students into taking out unaffordable loans and used aggressive debt-collection tactics. Corinthian reached a deal in July with the U.S. Department of Education to sell off the bulk of its more than 100 campuses and wind down the rest.
On Wednesday, Grand Canyon Education also reported that its third-quarter profit rose 29% as its enrollment increased.
Net income rose to $29 million, or 62 cents a share, from $22.5 million, or 49 cents a share, a year earlier. Revenue rose to $175.1 million from $152.4 million.
The company said enrollment at the end of the quarter was 68,122, up 14% from a year earlier.

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WALL STREET JOURNAL