David Tsao

The New Reality for Higher Education

What Mr.Salomon is eluding too is a possible shift and serious consideration for what was once the trade school circuit (The DeVry's, ITT, and Corinthian's of the world). If the value/price conscious parent/student continues to remain after an economic recovery, these outfits may continue to see strong enrollments... At last check most of these companies are fully valued and have discounted the strength of this sector for the remainder of this year and next.

Earnings Disappointment a Good Entry Point for Apollo Group?

You need to pay attention to the quality of the students for these for-profit programs. I'm not saying that University of Phoenix students are of bad quality, but making a reference to the majority of students are coming from. Are they coming from high school, which I would categorize as representing larger risk for defaulting on payment (higher allowance for doubtful accounts), or from employer sponsored tuition or transfers out of 2-year diploma programs (stronger credit and financial backing).

Method of payment also make a huge difference whether the school demands payment up front (like Strayer). I honestly don't know the payment details for Apollo's programs, nor do I have student demographics off the top of my head, but it's best to dig into that before diving in.

A Second Look at Educational Services and Student Lending Problems

CECO is the one that may fall by the way side. I'll be spending the next few days going over Strayer and DeVry's offerings with repect to healthcare (nursing) as this area of the employment market should bloom with baby boomer generation heading into retirement (need for healthcare, etc.)

I don't buy the story that technology education will slow because of the offshoring to India/China/Eastern Europe. Fortune 500 companies will soon realize that there is a need for engineers on both sides of the ocean, and that bottom line billable hour costs are not the only thing CFO's and CIO's should focus on.

This may spell some softness for tech education programs, but things will turn around.