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November 21, 2012

For-profits losing to better-rated state schools charging less

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"It's not an infinite market," Regier said. "A lot of our students would have gone to a for-profit. I don't know why students would go to for-profits once we get as good at customer service. Their brands are not as good, and they tend to be more expensive."

Apollo says its programs often cost less than private, not-for-profit colleges as well as state universities' non- resident tuition. Last month, the University of Phoenix announced it would freeze tuition for all currently enrolled students and prospects who sign up by June.

"We are tremendously competitive," said Mark Brenner, an Apollo senior vice president.

Apollo excels at helping job-hunting students, Brenner said. The University of Phoenix has established relationships with 2,000 corporations, including Verizon Communications, Wal-Mart Stores and Adobe Systems.

Those company ties haven't stopped the bleeding at Apollo. Enrollment at the University of Phoenix has plunged 30 percent to 328,400 students since August 2010. Apollo is shutting 115 locations, including 25 campuses, and eliminating 800 jobs over the next year.

Career Education, a college chain based in Schaumburg, Ill., is closing 23 campuses and cutting 900 jobs. Earlier this month, Strayer Education said it won't pay its $1-a-share quarterly dividend in 2013.

In September, Kaplan said it stopped enrolling students at nine campuses and is folding four others into nearby locations. This month, The Washington Post said it expects "to incur significant additional restructuring costs" in the fourth quarter and next year because of Kaplan.

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The grim news is a far cry from 1995 through 2010, when enrollment at publicly traded for-profit companies rose about 14 percent a year, according to Peter Appert, an analyst at Piper Jaffray & Co. in San Francisco.

"In the old days, they would take anyone who was breathing," Appert said in a phone interview. If they dropped out after a semester or two, so what? You've collected your money."

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