For-Profit Colleges in the Economic Crisis: Thriving in Tough Times?

Kai Yu, Hubert Ertl


Being closely connected to social, employment and financial factors, economic crises are expected to have influence on higher education. This study attempts to answer the following question: how has the economic crisis in 2008 affected for-profit colleges in the U.S.? To answer the question, this study samples from for-profit higher education companies that are listed on the U.S. stock market, and compares the companies’ enrolment, financing and operations, and stock prices before and after the economic crisis took hold around July of 2008. This paper finds that, as for student enrolments, the scale of operation of the higher education companies has greatly increased in the crisis. Concerning finances and business operations, the companies significantly increased the revenues and profits in the crisis. Finally, the companies’ stock prices greatly outperformed the market average in the crisis. The success of for-profit institutions in this economic crisis was determined by more than the economic consequences. While the economic climate mattered, the institutions themselves and the politics of regulation also played crucial roles.

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