Obama's community college plan no threat to for-profits
BANGALORE (Reuters) - President Barack Obama's $12 billion community college initiative could have an impact on the fortunes of for-profit education companies that offer associate degrees, but analysts say funding for the program is not big enough to make much difference.
Obama's 10-year program, unveiled last week, focuses on associate and vocational degree programs at government-funded community colleges and is aimed at getting people back to school and have them ready for "21st century jobs." Analysts said the program for community colleges could make them more competitive against firms such as Apollo Group Inc, Corinthian Colleges, ITT Educational Services Inc and Lincoln Educational Services Corp. However, they said the amount of money earmarked for the program would result in only a marginal increment in budgets for community colleges and have a small impact on these companies in the short term.
Analysts say community colleges lack facilities and flexibility that companies like Apollo offer. "One of the reasons Apollo was successful with its two-year programs was they make it so easy for someone to continue to work full time and enroll in school," Urdan said. "Community colleges are not good at that. They have a more rigid schedule." "We think for-profits will continue to outshine community colleges on student support services, flexible schedules, and lower teacher to student ratios," J.P. Morgan Securities' Andrew Steinerman wrote in a note dated July 14. [Reuters]
