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14 October 2010 By Rob Cox Follow @rob1cox

Apollo Group’s warning sparked a $5 bln meltdown in the U.S. sector. That’s about the value of the endowment of the University of Chicago, home of efficient market theory. Given the widely known risks facing forprofit colleges, it’s surprising they weren’t already priced in.

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Apollo Group said it withdrew its business guidance for next year as changes to its enrollment, recruitment and orientation processes are expected to accelerate the decline in new students at its forprofit schools. Shares of the company, which operates the University of Phoenix, slid 23 percent, wiping out some $1.7 billion of market value.

The company said it expects fiscal 2011 to be a year of continuing transition in its operations as it implements initiatives, primarily at University of Phoenix, aimed at enhancing the student experience, expanding student protections and shifting the mix of enrollment to more experienced students who have a greater likelihood of succeeding in the Company's programs.

Shares of other forprofit education providers also fell, with Corinthian Colleges and Education Management both losing more than 20 percent. Washington Post Co fell 9 percent; DeVry fell 17 percent; Career Education lost 15 percent; and Strayer Education declined 13 percent.

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