Apollo Group Inc, the leader for future indicators/ trends in the education sector and the for-profit, withdrew its forecast for 2011 on Wednesday evening, since the supporting reasons suggest a steep drop in student enrollments for the year. The parent company of the University of Phoenix expects a 40 % drop in new students next year, as it tightens its admission policies to ensure more 'quality' students. The education company has been facing severe regulatory pressures as the Department of Education is in the midst of drafting new rules to govern the sector.
During the week economy since more and more people strived to get better degrees in hope of acquiring better jobs, education provides such as DeVry Inc, ITT Educational Services Inc, Corinthian Colleges witnessed immense growth. The admission policies in most of these universities were lenient and supported admission of people from all backgrounds. This lead to a revenue boost but also raised the default levels. The for-profit sector fills the gap between elite universities like Harvard or Columbia and the community colleges. However, these are much more expensive than community colleges, resulting in people carrying a huge debt load. Apollo's latest initiatives seem to indicate that the rules will have some impact on the companies. When faced with weak employment prospects and huge loans, people begin to default, as with the housing market. However, the new rules framed by the government might allow some changes in the sector that focuses on value education at not-so-expensive loans.
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