For-Profit Education

Cappella-Strayer Merger Is Latest Sign of Upheaval in For-Profit Sector

October 30, 2017

Brooks Kraft, Getty Images
Strayer Education Inc., the for-profit parent of Strayer U., is merging with the Capella Education Company, another for-profit. The deal is just the latest development in what has become an increasingly volatile sector.

The landscape of publicly traded for-profit education looks a lot different than it did four years ago.

On Monday, Strayer Education Inc. and the Capella Education Company announced that they would merge, with Strayer becoming the corporate umbrella both universities will operate under. Each entity will retain its own governing board, president, and other administrative officers, as well as faculty and staff.

“This combination will allow us to accelerate investment in the educational experience we deliver to students at both universities,” said Karl McDonnell, chief executive of Strayer, “while achieving back-office efficiencies captured through the merger of our corporate functions.”

The move is the latest in a string of changes that have fundamentally altered the terrain of for-profit higher education over the last several years.

In April, Purdue University announced that it had acquired the for-profit online-education behemoth Kaplan University. The purchase surprised many faculty members and students at the public university in Indiana.

The Apollo Education Group, the parent company of the University of Phoenix, was sold to a consortium of investors in 2016, making it a privately held company.

There was also the dramatic demise of ITT Educational Services Inc., which closed all of its campuses last year, after a series of investigations led the Department of Education to suspend its access to federal student-loan dollars.

In 2015, Corinthian Colleges Inc. announced it would cease operations at its remaining locations, and filed for Chapter 11 bankruptcy. And the Career Education Corporation, which enrolled more than 100,000 students in 2011, is now a shell of its former self and has sold several of its entities.

But the sequence of misfortune for the sector does not mean that it should be counted out. Several observers have noticed a friendlier climate for for-profit colleges under the Trump administration. In June, Education Secretary Betsy DeVos announced that the department would re-regulate the borrower defense-to-repayment and gainful-employment regulations, two Obama-era rules aimed primarily at policing the sector.

Adam Harris is a breaking-news reporter. Follow him on Twitter @AdamHSays or email him at adam.harris@chronicle.com.