This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The College Shakeout Begins

Stocks in this article: APOLDVCOCOBPI

NEW YORK ( TheStreet) -- For nearly a quarter-century, ever since my daughter was born, I have been an off-and-on education reporter.

For most of that time, promises I made on the industry's behalf were fraudulent. New capabilities emerged before teachers could be trained on the old. What kids had at home was more compelling than what school offered.

PCs were heavy, expensive and fragile. I brought a typewriter to school in the 1960s. My son, who is also dysgrahic, never could in the 2000s. They weren't being made, and the available PCs were too valuable to risk.

But a lot has changed. The Internet has matured. New online tools such as Ancile's ULearn let colleges manage online tests reliably.

A new industry has been born, with nonprofit state schools such as Troy State in Alabama and Central Michigan opening offices in far-flung cities to manage thousands of online alumni, and for-profit institutions like Apollo Group's (APOL) University of Phoenix running national ads and buying stadium naming rights.

Stanford and MIT are among the first schools to place high-quality courseware online through a start-up, Coursera, but 16 major institutions will now offer classes through the system, the Seattle Times reports. The field even has its own acronym -- Massive Open Online Courses, or MOOCs. A single course can have as many as 100,000 students enrolled at any one time.

Teachers perform three roles. They present information, test the material, and tutor students who need help. They have been advertising a technology revolution for decades, with the saying "out with the sage on the stage, in with the guide at the side."

But, really, little has changed. Schools remain highly bureaucratic, at all levels. They continue building huge facilities to do things computers learned how to do decades ago.

What may drive real change is the industry shakeout that has now begun.

The for-profit sector is in big trouble, with DeVry (DV)leading another leg down thanks to disappointing results ( read about it on Insider Monkey) for the quarter ( and on Reuters). Reuters reports investor David Einhorn is shorting APOL, the market leader.

The industry's problems stem from its financing model. Some 42% of its students use private student loans, against 14% of public and nonprofit students, notes Daily Finance . This area is in its own sub-prime bubble, and while the totals aren't as big as they were for housing five years ago, they are still large enough to scare new money away.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,390.52 +195.10 1.13%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,630.7410 +64.6030 1.41%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs