Career Education To Cut 7% Of US Positions
January 19 2011 - 5:43PM
Dow Jones News
Career Education Corp. (CECO) said Wednesday it will cut its
U.S. work force by 7%, or 600 positions, as the for-profit educator
looks to cut costs in the face of slowing enrollment growth.
The company, whose schools include Le Cordon Bleu North America
and American InterContinental University, said the reductions will
roll out over the next few months. Career Education will book a
charge of up to $8 million in its fiscal fourth quarter on
severance and related costs.
Career Education joins a growing cadre of schools taking
cost-cutting measures as they respond to regulatory changes and
slowing growth. A series of rules issued by the U.S. Department of
Education addressing issues such as recruiter compensation have
upended the industry and a number of schools are scrambling to
tighten admissions standards as they await a regulation that could
restrict programs' access to the federal student financial aid on
which they rely for revenue.
Signs of economic improvement are also leaving fewer newly
laid-off workers looking to retrain, helping to pack a double
whammy for programs considered to be counter-cyclical.
Career Education in November announced that new-student
enrollment increased by 6% for the fiscal third quarter, far below
the 18% increase it posted in the second quarter and 19%
year-on-year growth it had reported in the prior-year period.
Apollo Group Inc. (APOL) in late November announced it was
cutting about 1.2% of its total company work force by eliminating
700 jobs at its University of Phoenix, mostly in the admissions
department. A week later, Washington Post Co.'s (WPO) Kaplan unit
said it was cutting about 770 positions, or 5% of its staff.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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