Only the Smart Survive

The number of private, for-profit colleges and program offerings is growing fast in Alberta. There’s just one problem: the number of prospective students is not. How the players are positioning themselves to withstand an expected industry shake-out

Dec 1, 2006  

by Suzanne Wilton

Ken Penner has always had a passion for education, business and computer technology. Launching his own private vocational college in Winnipeg seemed like the perfect way to marry all three. But when the dot-com crash hit, Penner found himself at a crossroads: grow or die. So the ex-high school teacher did the former, six years ago acquiring Winnipeg-based Robertson College and shifting the information technology school’s focus to meet changing market demands.

In 2004, seeing Alberta and its then budding economic boom as a “ripe” location for diversification and a way to tap a new, growing source of potential students, Penner expanded Robertson College, opening a campus in Calgary.

“We started off with a bang and had a full class on day one,” says Penner, who holds a master’s degree in education.

Robertson is one of the newest private colleges to set up shop in an already crowded marketplace of profit-driven, post-secondary schools. Given Alberta’s booming economy and high demand for skilled labour, private educators are increasingly seeing the province as the place to be. But as in other industries, private college owners are also finding that a rigorous regulatory process combined with the challenges arising from an overheated economy can be hurdles along the path to financial success. When the so-called Fort Mac attacks hit, the pool of potential of students can dry up fast.

Education as an industry is a calculated investment in the future; like the diplomas, degrees and certificates offered to students, a positive financial return is possible but never guaranteed.

There are about 150 private, post-secondary institutions licenced to operate as vocational colleges by Alberta Advanced Education, a number that has been steadily growing in recent years. The number of programs offered, meanwhile, is exploding. Private colleges that used to be relegated to training secretaries and hairdressers now offer courses in everything from specialized health-care jobs to bona fide master’s degrees to becoming a private investigator. Five years ago, the number of student programs offered across the province was about 500. By 2004, that grew to 612 and today there are 720. Advanced Education is currently reviewing an additional 80 applications.

Indeed, while training people to fill jobs in an increasingly lock-tight labour market, the rapidly growing education services industry is creating jobs unto itself. Alberta Human Resources Employment reported that in 2005 education services were among the top leaders in provincial job growth, employing 11,962 people.

Yet even as the education sector expands, there are only so many students to go around. About 10,000 people enrol in licenced, private vocational colleges each year, representing just 5% of all enrolment in post-secondary institutions. And the pool of potential students is shrinking.

Statistics show that between 2004 and 2026 Alberta’s population will grow faster than the province’s workforce. Alberta Human Resources and Employment predicts that the proportion of the Alberta population aged 25 to 44 – the target groups of private colleges – will decrease to 26.6% in 2026 from nearly 32% in 2001.

“It’s more challenging to operate today. There are more options for people and the market is actually getting smaller in terms of the baby boomers retiring,” says Mike Brousseau, campus director for the University of Phoenix’s Calgary campus, another new entry into Alberta’s private, post-secondary market, having arrived in the city in January of 2005.

Indeed, Statistics Canada reported this year that private colleges, the lesser-known players in post-secondary education, lost ground in the market during the decade-long period studied. Between 1993 and 2003, the number of young Canadian adults aged 25 to 34 holding a certificate from a private institution plunged by almost one half, although they were more likely than high- school graduates to be employed.

Despite those figures, the University of Phoenix – which will graduate its first three master of business administration students this fall – plans to expand to Edmonton, suggesting there’s optimism about the future for private education in Alberta.

The University of Phoenix is owned by the United States-based Apollo Group Inc., which trades on the Nasdaq stock exchange. It’s just one of a handful of large, for-profit educators that have emerged in the U.S. in recent decades and have expanded (or acquired their way) into Canada. Apollo recently reported that its total consolidated revenues for the nine months ending May 31 rose 11.6% to $1.85 billion US, compared with $1.66 billion in the same period last year. The University of Phoenix accounted for 83% of the $1.71 billion US in net tuition revenues from students enrolled in degree programs for the same period.

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