Plans are in motion to merge two major for-profit and publicly-traded colleges, Strayer Education and Capella Education. The deal has been approved by the board of directors at both companies, and will result in a single for-profit company that’s valued at $1.9 billion.
The new for-profit college, which will be called Strategic Education Inc., will serve around 80,000 students. That number includes both students from Strayer’s 73 campuses and Capella’s online programs. The two colleges will continue to run as two separate institutions with their own independent boards.
After the news, shares of Strayer, which is based in Virginia, went up by 7 percent and shares of Minneapolis- based Capella jumped by 27 percent.
That will no doubt please the two companies’ stakeholders. But recent scrutiny on for-profit education providers are a cause for concern. Several for-profit colleges shut down under the Obama administration, which aimed to hold for-profit providers more accountable in areas such as student graduation rates and loan forgiveness.
Corinthian Colleges, for example, was forced to close in 2015 for deceptive advertising and reporting false graduation rate to the government. In 206, ITT Technical Institute was forced to shut down its 130 campuses after a series of restrictions were issued by the U.S. Department of Education.
But “the Trump administration has acted to delay implementation of Obama-era rules focused on the for-profit sector and has signaled an easier regulatory ride for for-profit colleges,” Inside Higher Ed reports. So far that has meant blocking a rule that defined when students can receive loan forgiveness if a college has misled them, as well as plans to renegotiate gainful employment regulations.
Michael Feldstein writes that while though the Trump administration has garnered a reputation of being friendlier to corporate colleges, “we may be seeing the beginning of a trend among for-profits to drive toward a particular notion of a quality education as a key competitive differentiator.”
The education blogger points out that in the merger announcement, Strayer touts its employee relations, while Capella showcases its efforts around competency based education—which he says look more like “backwards-design,” where “outcomes and assessments are designed first and then the content is structured to match.”
Feldstein writes: “it looks like the Strayer/Capella leadership think they have found a way to compete on quality.”
