Tags: School | for-profit | degree | grant

For-Profit Schools Hurt Investors and Students

By    |   Wednesday, 25 Jun 2014 07:45 AM

During the past five years, for-profit schools have delivered some amazing losses to their investors. Corinthian College (COCO) has lost almost 98 percent of its value in the past five years, and shares of Career Education Corp. (CECO) have lost nearly 80 percent of their value. Capella Education (CPLA) has been among the best performers in the sector, with a loss of only 5 percent.

For-profit education is a large business with approximately $30 billion a year in revenue, much of it coming from federal grants and loans provided to students.

Just 22 percent of the students who enroll in full-time programs at these schools earn a bachelor's degree. This compares poorly with non-profit schools, where 65 percent of enrollees complete their degree.

By many measures, the for-profit schools fail to deliver a quality product. The poor returns of the stocks indicate that investors understand this. Unfortunately, the schools target potential students who don't realize the high costs associated with enrollment. Once the schools receive the grants and loans on behalf of students, the students forever lose their eligibility for that benefit. Odds are they won't get a degree and they lose the chance to attend a school that offers a higher probability of success.

Many investors and many students have suffered large losses in for-profit schools. Investors should follow the lead of Wall Street and take steps to dump for-profit schools from their portfolios.

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MichaelCarr
During the past five years, for-profit schools have delivered some amazing losses to their investors.
School, for-profit, degree, grant
235
2014-45-25
Wednesday, 25 Jun 2014 07:45 AM
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