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For-profit colleges still seeing declines in enrollment

Federal regulations meant to ensure that students at for-profit colleges don't come out of school crushed by debt and unable to find a job seem to still be taking a toll on the industry, financial analysts said.

Several for-profit college chains reported this week that their enrollments had dropped in the latest fiscal quarter, though not as much as in the previous quarter.

DeVry Inc. reported late Monday that enrollment at DeVry University was expected to drop up to 17 percent in the summer term from last summer's number. But that was an improvement from the spring term, when enrollment declined nearly 20 percent from the previous year period, the company said in a news release.

Investigation reveals claims of unmanageable debt by 'for-profit' college students

DeVry also said enrollment at its Carrington Colleges Group was expected to have declined 19 to 21 percent the quarter ending June 30. The group saw a plunge of nearly 31 percent in the previous quarter. 

And on Tuesday, Capella Education Co. said its total enrollment decreased 4.6 percent in the quarter ending June 30 and its new enrollment decreased 6 percent.

Morningstar Inc. senior analyst Peter Wahlstrom told the Chicago Sun-Times that prospective students are wondering “Can I get a job? Is that degree worth anything. There’s just a lot of questions that were raised.”

Read the Department of Education rules

As The Associated Press noted this week in a story about the industry's problems, the recession brought a big jump in enrollment. The U.S. Department of Education issued the tougher rules in June 2011 in response to what it called "widespread evidence of waste, fraud and abuse" in the industry.

The Education Department said last year that:

  • 92 percent of students at for-profit institutions borrow to finance their tuition, compared to 59 percent at four-year, private, non-profit schools and 46 percent at four-year public schools.
  • The proportion of those loans that are federally issued or federally guaranteed is approaching 90 percent, representing $18 billion a year.
  • Students at for-profit colleges are nearly twice as likely to be unemployed upon graduation as graduates of other types of schools.
  • Students at for-profit colleges make up about 12 percent of all U.S. college students but represent 46 percent of all student loans in default.

The status of the federal rules has been muddled by a federal judge's ruling last last month overturning a key component. The rules, which had been set to take effect July 1, required that for programs to keep their federal student aid, at least 35 percent of graduates must be repaying their loans. But Judge Rudolph Contreras of Federal District Court in Washington said in a ruling released June 30 that the benchmark was set too arbitrarily. The Education Department is reexamining the benchmark.

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