Looking for Industries to Avoid? Try Private Education Companies

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By Jacob Maslow

Female College StudentFor the longest time, private education companies and their stocks have been on fire. It is very easy to see why. As the economy started to sputter right after 2008, more and more Americans have gone back to school. This huge demand for higher education boosted tuition and student debt levels.

The less-publicized story behind this huge explosion of people going back to school is the trend of people working while going to school. While you can do this by attending a local community college or a four-year university, it is going to be quite inconvenient. Who wants to get in their car, drive to the other side of town, and then zip right back because you have work the next day? As a result, the registration rates for online colleges and institutions of higher education that offer online courses skyrocketed.

These service providers aren’t cheap. In many cases, they cost as much as a regular brick-and-mortar school. Well, now that there is a student debt crisis at play in the United States, and the fact that the economy is improving at a fast pace, the demand for these schools is going down. In fact, more and more Americans are going back to work.

We still have historically low labor force participation rates. But for those who do want to go back to work, there are jobs available. As a result, less and less people are using a college or a graduate school as a temporary holding area to invest in themselves while they weather the economic storm.

This economic improvement is putting a lot of downward pressure on companies like the University of Phoenix that offer private higher education instruction online. This is one sector you should avoid. I don’t see this sector recovering anytime soon or, at the very least, in the next few years.

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