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Thursday, November 15, 2012

Online, for-profit higher education institutions have been scrutinized by education traditionalists in recent years because many of them have higher-than-average dropout rates and can leave their students riddled with debt. From an education point-of-view going completely online may not be the most effective method but it has proven to be a very lucrative business model.
From a business standpoint the benefits of online courses are obvious. Higher teacher-to-student ratios mean that fewer professors need to be hired. Online higher education companies also don’t need to build large buildings full of classrooms, computer labs or other laboratories. While not all for-profit colleges are wholly online they have typically made the transition much quicker than non-profit educational institutions.
An innovation that many for-profit colleges have followed is the making of corporate partnerships, like the one that American Public has made with Wal-mart, to train employees in exchange for funding. Wal-mart provides American Public with $50 million each year for books and tuition while the school teaches 2,800 Wal-mart employees.
It is innovations like this, and impressive annual growth, that caused Forbes.com to list 3 education companies on their list of the top 25 small US companies in 2012. To be considered for the list a company had to have annual revenues below $1 billion and show impressive growth during the last few years while still maintaining significant potential to continue growing in the future.
The statistics of the education companies in these areas are very impressive.

American Public Education

$291 million annual revenue: as mentioned above American Public has made deals with larger corporations to ensure funding and guarantee revenue sources. Over the last year American grew by 44% which brought in a healthy return for the investors of this publicly traded company. As of December 31, 2010 American Public serves about 83,500 students living in all 50 states.

Grand Canyon Education

$458 million annual revenue: Founded in 1949 Grand Canyon has been around for a lot longer than American Public but with the emergence of online education Grand Canyon has found new life, reporting 47% growth last year. On March 11, 2011 Grand Canyon had approximately 42,500 students enrolled, 90.9% of which were enrolled through online programs.

Strayer Education, Inc

$587 million annual revenue: With 89 physical campuses and a tradition dating back to 1892 Strayer definitely has a lot more overhead than a strictly online school but it has still managed to show huge growth by developing a very robust online program. Strayer grew by 21% last year.
Because of the successes of these companies many new education companies have cropped up in the last 5 to 10 years. While the three companies above are still considered small companies, some have outgrown the ‘small company’ label. The University of Phoenix, perhaps the most well-known education company, has expanded drastically during this period. With an average enrollment close to 400,000 the University of Phoenix pulls in annual revenues in the billions. The profit driven approach to education may seem funny to those that, as George Washington did, consider education the “greatest and noblest of all human callings” and yet with the huge revenue potential that these companies present it seems likely that they will continue to grow for years to come.

Author Bio:Robert Cordray is a freelance writer for income.com and expert in business and finances. With over 20 years of business experience, Robert is now retired and hopes others can benefit from his writing.

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