The Business of Education; For-Profit Strayer Posts Gains in Enrollment, Revenues

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Byline: William Glanz, THE WASHINGTON TIMES

Strayer Education Inc. Chief Executive Robert Silberman teaches an introductory business course at the company's for-profit university when he isn't running the $1.3 billion education firm.

He could also give lessons on how to turn a sleepy business into a fast-growing moneymaker.

Strayer University is in the midst of its most explosive growth ever.

Enrollment increased 31 percent last year.

Revenue vaulted 26 percent in 2002 and in 2003.

The company has no debt and has $108 million in cash and short-term marketable securities.

And while nearly all for-profit, post-secondary education companies have seen their stock increase over the past year, Strayer's share price has been among the most impressive in the $15 billion industry. Strayer's stock is up 98 percent over its closing share price a year ago, closing Friday at $118.77 a share on the Nasdaq.

Despite the company's phenomenal performance, Mr. Silberman, a 46-year old former Defense Department administrator, says Strayer's success does not surprise him.

"It seems to me that if you can figure out how to do this business, it ought to expand. For us, the issue is not the rate of expansion, it's maintaining the quality of the education while we expand," he said.

Strayer, which opened in 1892, markets undergraduate and graduate degrees in accounting, education, business administration and information technology to working adults.

Demand for college degrees among working adults has fueled rampant growth at Strayer and its competitors.

"The whole industry has done very well," said Jerry Herman, managing director at investment banker Legg Mason Wood Walker.

That's owing in part to a weak job market, which has convinced some people to return to school to improve their skills and bolster their earning potential.

There are an estimated 60 million working adults who don't have more than a high school diploma, according to the U.S. Bureau of Labor Statistics.

Demographic changes are likely to continue fueling growth at for-profit and nonprofit post-secondary schools. The number of high school graduates is expected to increase from 2.8 million in 2000 to 3.3 million in 2010.

But while Strayer has become well-known in the Washington area, it has little name recognition outside the region. Mr. Silberman's ambitious plan includes making the company a national player.

Strayer has campuses in the District and six states.

Last year, the company opened five campuses, more than it did in any other year. It plans to open five more campuses this year, giving it 30 campuses.

Its expansion has boosted enrollment from 14,009 during the fall quarter in 2001 to 20,138 during the fall quarter last year. Revenue has grown from $92.8 million in 2001 to $147 million in 2003.

The biggest company in the for-profit, post-secondary education industry is Apollo Group Inc., which runs the University of Phoenix and has 201,400 students at campuses in 29 states.

Mr. Silberman, who earned $970,000 last year in base salary and bonuses, said the aggressive expansion will continue, but he declined to say which states Strayer is targeting for new campuses. …