Pharos-Tribune

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November 22, 2012

For-profits losing to better-rated state schools charging less

(Continued)

For-profit colleges have also suffered damage to their reputations. In the past two years, the schools, which can receive as much as 90 percent of their revenue from federal student grants and loans, have faced scrutiny from President Obama's administration, Congress and state and federal prosecutors. Investigators have said the schools use high-pressure sales tactics to mislead applicants about costs and job placement, leaving them with government loans they can't repay.

For-profit college stocks fell after Republican presidential challenger Mitt Romney, who had called for less regulation of the industry, lost to Obama.

Phoenix, Ariz.-based Apollo, the largest U.S. for-profit college company, is down 64 percent this year, among the worst performers in the Standard & Poor's 500 Index.

Twelve of the 13 for-profit college companies tracked by Bloomberg have suffered stock declines this year, with six down at least 50 percent. The exception: Grand Canyon Education, which operates a traditional campus in Phoenix with a Christian focus alongside its online program.

State universities' online programs offer cheaper degrees from better-known institutions. Arizona State charges $442 per credit hour for an Internet bachelor's degree, or about $11,000 a year including fees, according to the school. University of Phoenix typically costs about $585 per credit hour, or about $15,000 a year.

Prospective students attracted by affordable tuition have boosted enrollment at the University of Florida's online program by 10 to 15 percent a year to 7,000 currently, said Andy McCollough, an associate provost. Florida residents pay $147.49 per credit hour, or $5,000 a year, including other fees. At Western Governors University, with 37,000 students, enrollment is jumping at a 40 percent annual clip, according to Joan Mitchell a spokeswoman for the Salt Lake City-based nonprofit online college. It charges about $3,000 for a six-month term.

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For-profit schools have revolutionized customer service, letting students call and sign up in as little as 48 hours, then attend convenient campuses or online programs, said Phil Regier, dean of Arizona State online, whose enrollment has climbed to 7,000 from 200 in August 2009. Now, traditional schools are starting to offer the same approach.

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