Career Ed dissident shareholder offers turnaround plan :: Crain's Chicago Business
Career Ed owns American Intercontinental University (AIU) the parent of American University in Dubai (AUD). Here's some of the latest on Career Ed:
Career Ed owns American Intercontinental University (AIU) the parent of American University in Dubai (AUD). Here's some of the latest on Career Ed:
Career Ed recently received three good pieces of news: the staff of the Securities and Exchange Commission recommended ending a probe of claims that the company overstated enrollment and revenue; a California judge voided the probation of one of the company's schools; and a federal judge for a second time dismissed a class-action investor lawsuit against the company (although the case can be brought one more time).
Career Ed still faces investigations by the Department of Justice, the Department of Education, and California, Texas and New Jersey authorities, as well as lawsuits by current and former students and employees.
The SEC news was enough for several analysts to upgrade Career Ed's stock from an "underperform" to a "neutral," including Matthew Litfin, an analyst at William Blair & Co. in Chicago. . . . Career Ed's shares have dropped 47% since hitting a high in April 2004, closing Monday at $37.17, down 26 cents from Friday.
. . .
Hoffman Estates-based Career Ed operates for-profit colleges and trade schools around the U.S., enrolling about 104,000 students. In December, the company's American InterContinental University (AIU) was placed on probation by its accrediting agency, which cited concerns about the integrity of student academic records and accuracy in recruiting and admission practices.
. . .
If Career Ed can't address the accreditor's concerns, AIU could lose its accreditation and its access to federal student loan dollars. Such loans make up 62% of Career Ed's tuition revenue.
. . .
"Their operating costs are way too high," Mr. Bostic says. "When you recruit as many students as they do who don't finish, you spend all that money to bring them into the school and then you have to replace them. The cost of replacement is in the thousands of dollars." Mr. Bostic says Career Ed does not disclose its graduation rate, but he says, "We know that far too many students enter the programs and then leave." A spokeswoman said the company's 60% graduation rate, as of May 2005, is, in fact, publicly reported and is "higher than the aggregated percentage for public schools, is in line with aggregated percentage for private schools, and continues to exceed most of CEC’s competitors in the for-profit sector.
Labels: AIU
2 Comments:
The reason why AIU's graduation rate is so low is because right before the student graduates, they tack on a bunch of classes and then expect the student to pay for them the week the do that, or they are withdrawn from the school.
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