REUTERS: Apollo Education profit, forecast hurt by falling enrollments

Career College Central Summary:

  • For-profit education provider Apollo Education Group (APOL.O) forecast second-quarter revenue below analysts' estimates and reported a 66 percent drop in first-quarter profit as fewer students signed up for its degree programs.
  • Apollo's shares were down 13.4 percent at $27.59 in noon trading on the Nasdaq.
  • Total enrollments at Apollo's flagship University of Phoenix dropped 20.4 percent to 592,853 in the quarter ended Nov. 30.
  • The results indicate that it may be a while before the industry starts seeing the benefits of changed curriculums and cost-cutting initiatives.
  • For-profit education companies have been grappling with falling enrollments as lower graduation rates and poor job placement records have left students unemployed and heavily indebted.
  • Companies in the sector including Apollo and rivals Corinthian Colleges Inc (COCO.O) and ITT Educational Services (ESI.N) are under regulatory scrutiny over issues including student loans and placement rates. Corinthian was forced to sell most of its campuses last year.
  • The U.S. department of education will introduce new regulations this year in its latest attempt to improve the job prospects of those graduating from for-profit colleges and universities.
  • Under the regulations unveiled in October, for-profit colleges will be at risk of losing federal aid should a typical graduate's annual loan repayments exceed 20 percent of discretionary income or 8 percent of total earnings.

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