Will Obama's education stimulus plan impact for-profit EDU companies like Apollo Group?

Anpadh answered 9 months ago …

In this crazy market, anything is possible.However, it is extremely unlikely that institutions of higher education will see anything but a global decline over the next ten years. It is irrelevant whether they are for-profit or non-profit. The real question is: How deep and wide is the customer-base? Education up to high school is mandatory. That segment, therefore, has the widest and deepest customer base. There will always be more children and they will need basic literacy skills. And even so, we are seeing layoffs in practically every public school system in the US.

As for higher education, look at it this way. At the very least, a student would spend tens of thousands of dollars on getting a 4-year degree, and tens of thousands more if he/she chooses to go beyond that. Now, ask yourself this. If you are a college student, hoping to get a job and/or better pay by getting a college degree and you see your teachers and other professionals with that same degree or higher, getting laid off by the thousand, every day, what is your incentive for getting that degree? The likelihood of a negative ROI is almost 100%, at least over the next 10 years.

Furthermore, as colleges are struggling to bring in more students, they are forced to lower the quality of incoming freshmen. And that, in turn, increases the dropout percentage, and decreases the percentage of graduating students and even further decreases the percentage of graduating students who will find employment in their chosen field. Apollo and other such companies will begin to find success again when they become more selective in whom they admit as students and also whom they hire as teachers.

There will always be a few professions, such as IT where it is almost mandatory to keep getting more and more advanced certifications. However, such industries are few. And even in IT, after the first few certificates, a student can study on his/her own, to take the tests.

So, bottom line: No, Obama's stimulus package will in no way have any type of positive impact on companies like Apollo. CEC, Corinthian, etc.