Core Insights - The private higher education sector is experiencing an unprecedented downturn, facing challenges such as enrollment difficulties and financial instability, contrasting sharply with its previous status as a lucrative industry [1][6][7] Enrollment and Financial Performance - In 2024, the number of students in private colleges exceeded 10.52 million, a 70% increase from 6.162 million in 2016, driven by significant capital influx following the 2016 revision of the Private Education Promotion Law [3] - The leading player in the industry, China Education Group, operates 14 institutions with nearly 280,000 students, significantly larger than Tsinghua University and Peking University [3] - In 2021, China Education Group spent 9.58 billion RMB on acquiring 10 colleges, achieving a net profit of 1.472 billion RMB, a 107.2% year-on-year increase [3] Cost Structure and Profitability - The high profitability of private colleges is attributed to cost control and the focus on low-cost programs, with average teaching costs significantly lower than income, resulting in gross margins above 50% [3] - For instance, in 2021, China Education Group reported an average teaching cost of 5,400 RMB per student, while the average income was 13,000 RMB [3] Challenges and Market Dynamics - By 2025, many private colleges faced severe enrollment shortfalls, with some institutions in Guangdong and Yunnan failing to meet their admission targets [6] - The phenomenon of students opting out of enrollment has intensified, with significant numbers of new students abandoning their places, raising concerns about the perceived value of private education [6] - The rising costs of tuition, with increases of 15%-30% in 2025, have further alienated parents, leading to increased skepticism about the quality of education provided [6] Industry Reflection - The trajectory of the private higher education sector reflects deeper contradictions in the market-oriented reform of education, where a focus on profit over quality has led to inevitable backlash as enrollment declines and parental expectations shift [7]