Mr. Silber: Education is a fairly wide industry. It covers everything from the preK-12 area, such as childcare providers; K-12, which would be companies that manage either schools or offer programs or services to elementary and high schools; postsecondary or college providers; through corporate training. I spend most of my time in the postsecondary area, and that would be companies like Apollo Group, (APOL) that manages the University of Phoenix; DeVry (DV), which runs DeVry University and has a whole host of other properties and Corinthian Colleges (COCO) which mostly focuses on vocational programs. It's a fairly wide group.
TWST: When the economy is bad, people tend to go back to school. So to what
extent has the recession been a boon for companies in this space?
Mr. Silber: It's definitely been more of a boon for the postsecondary area. On
the K-12 side, a bad economy is not necessarily a good thing. Most of these
companies get their funding from state and local tax revenues. So that sector
has been hit. But on the postsecondary side, the recession has been a benefit.
Number one, your chief competitors for most of these schools are publicly run
colleges and universities, community colleges for example. They are under the
same budget pressures as the K-12 sector. So your competitors get weaker in an
economic downturn. On the other hand, demand as you had mentioned does pick up.
More people do go back for additional schooling in a bad economy, specifically
at what I'll call the lower-end of the sector, and I don't mean that in any
derogatory fashion. These would be companies that provide non-degree programs,
for example becoming certified as a medical assistant. These are catered to the
type of folks that in a bad economy really need to get retrained because there
are not a lot of opportunities for them. Most of them don't have much more than
a high school education. So while we are seeing solid enrollment demand across
the postsecondary spectrum, it's much stronger at the lower end.
Tickers included in this excerpt: APEI, APOL, BPI, COCO, CPLA, DV, LINC, LOPE
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