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

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