Short courses offer hope to U.S. education companies

Reuters News
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Posted: Jan 13, 2015 1:54 PM

By Abinaya Vijayaraghavan

(Reuters) - Short-term courses could well be the way forward for traditional for-profit education providers in the United States as they struggle to arrest the slide in enrollments.

Larger for-profit education companies, including Apollo Education Group Inc and ITT Educational Services Inc, have seen their enrollments dwindle in the face of increased regulatory scrutiny for issues including student loans, poor placements and low graduation rates.

This has given a boost to smaller schools offering niche courses, which teach skills that give students an edge in the job market at a fraction of the cost of a degree course.

"Bootcamps" and "nanodegree" courses are fast gaining popularity among students as they look to avoid the heavy debt burden that usually accompanies a degree program.

For-profit education providers should increase focus on shorter online courses to attract students, said Kevin Kinser, associate professor at the University of Albany, State University of New York.

"It would help the for-profit education providers to diversify the way they are gaining revenue from educational products," he said.

The U.S. department of education has proposed new regulations in its latest attempt to improve the job prospects of those graduating from for-profit colleges and universities.

This has made it necessary for traditional for-profit colleges to look at adding less expensive courses to their curriculum and partnering with corporate employers to ensure better placements.

Smaller schools allow students to opt for a short and targeted course, unlike in larger schools, where they often have to take an integrated program.

For example, Mobile Makers Academy is one such "bootcamp" that teaches computer coding at its campuses in Chicago and San Francisco. The eight-week course costs $9,000 and students meet prospective employers after it ends.

Apollo Education's Phoenix University offers a degree in Bachelor of Science in information technology with focus on software engineering. A 100-200 level course costs $410 for one credit.

"The tech bootcamps where people can learn to code in eight weeks at a lower cost are really a threat," First Analysis analyst Tom Bakas told Reuters.

Up to Monday's close, Apollo Education's shares had fallen 14 percent in the past year, while ITT's shares had lost more than two thirds of their value.

(Writing by Sweta Singh; Editing by Kirti Pandey)