- The Washington Times - Tuesday, February 26, 2008

Buoyed by rising student enrollment, Strayer Education Inc. is more than weathering the credit crunch as the Arlington company saw a 22 percent jump in fourth-quarter profits.

The Arlington parent company of Strayer University reported a 16 percent increase in total student enrollment to 37,323 as of Dec. 31. Earnings climbed 22 percent to $19.5 million ($1.34 per diluted share) from $16 million ($1.11) a year ago.

Strayer University, which operates 55 campuses in 13 states, markets associates, bachelor’s- and master’s-degree programs to working adults.

The school has been insulated from turbulence in the lending market because private loans only account for 3 percent of revenue, Chief Executive Officer Robert Silberman said. Of those, only one-quarter of a percent are subprime loans, he added, noting that the vast majority of the company’s revenue is from federally insured loans and employer funding programs.

“We are confident there are more than ample sources of credit available to our students today,” Mr. Silberman said on a conference call.

Strayer, concentrated in the eastern part of the country, recently opened new campuses in Raleigh and Charlotte, both in North Carolina. The company plans to open additional campuses in existing markets of Atlanta and Orlando, Fla., in time for the spring term, as well as five campuses in new markets.

In addition to bricks-and-mortar campuses, the university emphasizes online courses, serving students in all 50 states and 30 foreign countries with its Web curriculum. The number of online students grew 32 percent to 3,940 in the fourth quarter.

The company raised tuition in January 5 percent to $1,355 per course for full-time undergraduates, $1,430 for part-time undergraduates and $1,835 for graduate students.

Amy W. Junker, an analyst with Robert W. Baird & Co. in Milwaukee, said Strayer has “industry-high operating [profit] margins in excess of 30 percent.” She has a positive “outperform” rating on the company.

“Although opening new campuses negatively impacts margins, Strayer has been able to keep margins relatively stable,” she said.

Ms. Junker noted that the post-secondary market is poised to expand as the U.S. population grows, the economy shifts from manufacturing to being service-based and the wage gap between college graduates and those without a secondary degree widens.

“As students look to balance school with work and personal obligations, enrollments in online programs are growing more rapidly than campus-based programs,” she said.

Shares of Strayer yesterday closed down $3.79, or 2.4 percent, to $154.96 on the Nasdaq Stock Market.

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