Ever-Shrinking For-Profit

Education Management Corp. is shutting down most Brown Mackie College campuses because of dwindling demand for the for-profit and its programs.

June 15, 2016

Lack of interest in Brown Mackie College’s programs is behind the decision to shutter many of the for-profit institution’s campuses.

Education Management Corporation announced over the weekend that it would close 22 of the 26 Brown Mackie campuses across the country over the next few years, and that the college would not accept any new students.

“What we’re seeing is, in some areas, program demands were dropping. We were seeing fewer students interested in particular programs and fewer students interested in the college in their region,” said Bob Greenlee, a spokesman for EDMC. Greenlee wasn't able to provide details about which programs had seen significant declines.

However, the marketplace for allied health students has been pretty weak for the for-profit sector anyway, said Trace Urdan, a financial analyst in the for-profit education market with Credit Suisse.

"We're seeing a lot of consistent nursing market strength and that's the one bright spot in the vocational school market, but the market for medical assisting, which is what Brown Mackie does, has been really weak," Urdan said.

Brown Mackie's overall enrollment has been falling; it has dropped to 7,773, Greenlee said. In 2013 the colleges reportedly had approximately 17,000 students, according to the Pittsburgh Post-Gazette.

Greenlee said the reasons vary and differ from campus to campus for why demand for Brown Mackie programs dropped.

He also wouldn’t attribute the declines to any increases in competition or compliance with new U.S. Department of Education policies such as gainful employment regulations.

But entry-level fields like medical assisting that institutions like Brown Mackie and Zenith Education Group operate in aren't appealing to students, Urdan said. Those careers typically pay about $15 an hour, and potential students aren't open to taking out student loans for a career that pays close to minimum wage.

"The argument for it is that it's a career investment and you can work your way up," Urdan said. "Sooner or later the employment market will sort that out."

But by then, it'll be too late for Brown Mackie, he said.

Overall program demand is down across the for-profit sector. Like community colleges, which see enrollments grow when the economy worsens (and jobs disappear), so too do for-profit institutions like Brown Mackie, said Noah Black, vice president of communications for Career Education Colleges and Universities, known until a week ago as the Association of Private Sector Colleges and Universities.

But Black also attributed some of the sector's troubles to increased regulation, which has become a common complaint from advocates for for-profit colleges.

“The looming gainful employment regulation coupled with increased challenges from the Department of Education to the sector has resulted in access to fewer programs for new traditional students,” he said in an email.

EDMC may also be slimming down its portfolio of for-profit institutions, while at the same time dealing with increased scrutiny from federal and state agencies.

Last month the for-profit chain announced it was laying off 200 employees from the online division of its Art Institute of Pittsburgh, while last year the company announced it would close 15 of 52 Art Institutes locations.

Greenlee said last week that the Minneapolis location of an Art Institutes campus would also cease operating. Besides the Art Institutes and Brown Mackie, EDMC also owns Argosy University and South University.

Last year the Obama administration reached a $100 million settlement with EDMC over allegations that the chain illegally paid bonuses to recruiters.

In the meantime, Brown Mackie will continue operating as it teaches out current students in two- and four-year programs.

Greenlee said that at a minimum those campuses will remain open for the next two years. Four campuses -- two based in Ohio and one each in Iowa and Kentucky -- will continue to accept new students.

“We’re trying to make sure we’re using the resources we have so current students get the education they signed up [for] without spreading ourselves thin with new students,” he said.


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