For-Profit Group and Big Chains Part Ways

Big changes for APSCU, the for-profit trade group, which has lost most of its large-chain members and plans to focus again on career education.

July 15, 2015
Association of Private Sector Colleges and Universities
Steve Gunderson, APSCU's president

The for-profit college sector’s primary trade group is being buffeted by some of the same challenges its industry faces.

Most large, publicly held for-profit chains have left the Association of Private Sector College and Universities (APSCU) in the last year or so. And officials with the association said they have begun restructuring and refocusing on their career-school roots.

“This sector and its association need to be defined by the mission of its schools, not the corporate structure,” said Steve Gunderson, a former Republican congressman from Wisconsin who has led APSCU since 2012. “We are focused on postsecondary career schools and skills.”

The association also plans to court nonprofit career institutions, Gunderson said. Five nonprofits are already members, but all of those colleges are former for-profits that converted to nonprofit status, in some cases motivated by a desire to avoid the regulatory scrutiny for-profits have faced under the Obama administration.

APSCU’s shift is a reversal from five years ago, when the group changed its name from the Career College Association. That move was an attempt to be more amenable to big for-profit chains, which had moved deeper into the issuing of degrees and were less keen on being called career colleges, said Trace Urdan, a for-profit industry analyst, most recently with Wells Fargo.

“That was the whole point of that name change,” Urdan said.

The University of Phoenix and its holding company, the Apollo Education Group, never signed up. Neither did Capella University or American Public Education, both of which are generally considered to be high-quality publicly traded for-profits.

In recent weeks the DeVry Education Group and Kaplan have dropped their membership with APSCU, the association said. Spokespeople for the two companies declined to comment on the move.

Those departures follow previous exits by Corinthian Colleges, Education Management Corporation (EDMC) and ITT Tech.

Corinthian went belly-up last year amid serious financial woes and a long list of legal and regulatory problems, most of which revolve around bogus job-placement claims and deceptive marketing. ITT and two of its executives are facing fraud charges the U.S. Securities and Exchange Commission filed in court earlier this year. The company also has fiscal challenges, as does EDMC.

Most of the large for-profits have closed campuses and laid off staff or eliminated positions. Some have fewer public relations and government relations officials working for them.

Career Education Corp. and Bridgepoint Education appear to be the last major for-profit chains that remain on the membership rolls at APSCU. The group represents more than 800 schools, many of them small career colleges.

APSCU has changed its name twice, having previously been the National Association of Trade and Technical Schools. Another change may be in the works.

“Our current name does not define either our mission or our members,” said Gunderson.

Ben Miller, senior director for postsecondary education at the Center for American Progress, said it was ironic that APSCU was rebranding with a focus on career education.

“It’s trying to get back to their higher-quality roots,” said Miller, who is a former official at the U.S. Department of Education and who has written about this topic. “For too long APSCU was willing to defend its lowest-performing members.”

Contraction and Clarification

It’s unclear why most of the publicly traded for-profits have left APSCU, since those companies aren’t talking. But Gunderson said the group and those institutions have less in common these days.

For example, Kaplan recently sold all 38 of its Kaplan College campuses to the Education Corporation of America (ECA). Kaplan has diversified in recent years, with learning science offerings and experiments in competency-based education, big data and learning analytics. The company also does lots of business with traditional colleges, particularly its international and test-prep divisions.

Without its large campus presence, Kaplan and APSCU have fewer reasons to work together. ECA, however, is a member.

Likewise, Gunderson said, his association would focus on career education with a local or regional flavor, rather than on online degrees that are marketed nationwide. That business, which fueled the for-profit boom before 2011, has cratered badly. At least it has for the for-profits -- nonprofits like Southern New Hampshire University and Liberty University continue to grow their large online divisions.

Whether or not APSCU can attract more nonprofit career college members is an open question. But Gunderson said he is optimistic that the group’s refocusing will help it turn around several difficult years of restructuring.

“It gives us the potential for positive momentum and growth,” he said.

The association played a prominent role in fighting the Obama administration’s effort to rein in for-profits with its gainful employment regulations. Those rules, which apply to all programs at for-profits and to nondegree, vocational ones at nonprofits, set minimum thresholds on graduates’ debt-to-income levels.

APSCU sued to block the rules. It succeeded the first time by getting gainful employment thrown out by a federal judge, who ruled that the department set one of the metrics arbitrarily. Yet the court backed much of the department’s approach, as well as its authority to set the rules.

The second version of gainful employment also landed in court. But federal courts rejected lawsuits that APSCU and New York State’s for-profit association filed. APSCU recently said it would appeal, but the odds of blocking the rules seem slim.

APSCU has had successes. For one thing, Gunderson, a political moderate who, in 1994, was outed as gay on the floor of the U.S. House of Representatives, has stuck with his promise not to bash other sectors. He is generally well liked in Washington, and has helped the group cut a kinder, gentler image.

Urdan said the for-profit group has taken a hit with the loss of big chains.

“It’s got to diminish their influence,” he said. “But on the other hand, it’s clarifying.”

Small career colleges and publicly traded companies often don’t see eye to eye, Urdan said. “That tension was always there,” which sometimes made it tough for APSCU to speak with a clear voice. Now the group should be able to represent one type of school that generally has a consistent position, he said.

APSCU has another advantage if it goes back to a name that features the word “career” -- the group never changed its web domain, which is


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