FEU vs. CEU: FEU’s Enrollment Edge Softens the Blow as Costs Squeeze Philippine Universities

Far Eastern University expanded its student base and revenue, while Centro Escolar University relied on higher fees to counter declining enrollment. At both institutions, costs rose faster than educational income.

Two of the Philippines’ publicly listed universities entered the past academic year from different positions but arrived at a similar problem: Tuition revenue wasn’t growing fast enough to keep pace with costs.

Far Eastern University had the stronger hand. Its student population increased about 1%, helping lift tuition and other school-fee revenue 3.5% to ₱5.92 billion for the year ended May 31. Total revenue increased about 4%. Centro Escolar University, by contrast, recorded only a 0.5% increase in tuition and other fees to ₱2.39 billion, as declining student numbers largely offset higher prices.

The results illustrate the increasingly difficult economics of private education. Universities can raise tuition, but enrollment ultimately determines how much of those increases reaches the top line. At the same time, salaries, technology systems, maintenance, utilities, and campus investment continue to move higher whether classrooms are full or not.

FEU’s enrollment growth gave it more room to absorb those pressures. It didn’t eliminate them.

Growth That Cost More

FEU’s operating expenses jumped nearly 14% to ₱4.45 billion, far outstripping the increase in revenue. Salaries and benefits rose 12% to ₱2.20 billion, while depreciation and amortization increased 13% to ₱674 million. The university group also spent more on information technology, artificial-intelligence initiatives, utilities, and its transition between academic systems.

Operating income dropped 15% to ₱1.54 billion as a result. Net income proved more resilient, falling 4.4% to ₱2 billion, because investment and other income cushioned some of the deterioration in the education business. Earnings per share declined to ₱80.43 from ₱85.94.

The distinction matters. FEU continued to add students and collect more educational revenue, but each additional peso of revenue came with a disproportionately larger increase in costs. Enrollment growth protected earnings. It didn’t expand margins.

CEU faced a more difficult combination. Its consolidated enrollment dropped 4.5% to 18,254 students, with declines at its Manila and Makati campuses partly offset by growth in Malolos. A 3% increase in tuition and other fees helped preserve revenue, but it wasn’t enough to generate meaningful top-line growth.

Total expenses rose about 8% to ₱1.89 billion. General and administrative expenses climbed by nearly ₱94 million, or roughly 40%, to ₱330 million. Repairs, security and janitorial services, advertising, taxes, utilities and credit-loss provisions contributed to the increase.

CEU’s net income fell 20% to ₱548.1 million from ₱685.7 million, while earnings per share dropped to ₱1.22 from ₱1.53. The decline was substantially steeper than FEU’s and reflected the compounding effect of weak enrollment, nearly flat revenue, and rapidly rising overhead.

Cash Tells a Clearer Story

The gap between the two universities also shows up in cash flow.

FEU generated ₱1.99 billion in cash from operations, down only slightly from ₱2.03 billion a year earlier and almost equal to reported net income. That indicates the group’s earnings remained broadly supported by cash, even though additional money became tied up in receivables and other working-capital accounts.

Trade and other receivables increased by about ₱122 million to ₱1.17 billion. Still, FEU’s allowance for impairment declined to ₱192 million from ₱227 million, suggesting that the rise in outstanding balances wasn’t accompanied by a comparable deterioration in expected collections.

CEU generated about ₱682 million in cash from operations, down 28% from the previous year. Operating cash flow remained above net income, but the sharp decline signaled that pressure extended beyond the income statement.

CEU’s net tuition receivables rose to ₱259.5 million from ₱243.2 million. More notably, its expected-credit-loss allowance increased to ₱185.4 million from ₱152.5 million. That combination points to a growing share of student accounts requiring closer collection attention, a potential sign of affordability pressure among families.

That doesn’t make CEU financially distressed. The university finished the year with ₱1.11 billion in cash and another ₱373 million in short-term investments. But rising receivables and provisions make the quality of future revenue growth as important as the revenue itself.

Investing Through the Squeeze

FEU continued to spend heavily even as operating profitability weakened. Purchases of property and equipment increased to about ₱1.28 billion from ₱1.04 billion, while construction in progress climbed sharply. Its overall property-and-equipment balance rose 13% to ₱10.29 billion, reflecting campus investment and the consolidation of Higher Academia Inc.

Those investments could support future enrollment and capacity, but they also raise depreciation and fixed costs before the full revenue benefit appears. FEU’s challenge is to ensure that expansion translates into stronger student growth, rather than simply a larger cost base.

CEU took a more conservative approach. Capital expenditures declined to ₱132.9 million from ₱151 million. The restraint helped preserve liquidity, but it also highlighted the institution’s more defensive posture during a year of declining enrollment and earnings.

Same Pressure, Different Starting Points

FEU emerged with the stronger annual result. It posted positive enrollment growth, stronger revenue momentum, more stable cash generation, and a diversified network that can offset softness at individual campuses. Its balance sheet also remained substantial, with ₱20.84 billion in assets, ₱17.50 billion in equity, and ₱2.57 billion in cash at year-end.

Yet FEU’s advantage shouldn’t obscure its own warning signs. A 14% rise in operating expenses against 4% revenue growth isn’t sustainable indefinitely. Unless investments in technology, facilities, and academic capacity produce higher enrollment or improved pricing power, margin pressure could persist.

CEU’s problem is more immediate. Tuition increases kept revenue from declining, but pricing alone couldn’t overcome the loss of students. The university now has to stabilize enrollment at Manila and Makati while controlling administrative expenses and managing tuition receivables.

For both schools, the lesson from the year is straightforward: Enrollment remains the first line of defense, but cash conversion is the more revealing test.

FEU passed that test more comfortably. CEU remains financially sound, but its narrowing margins and weaker operating cash flow leave it with less room for another year in which costs rise and students don’t return.

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Disclaimer: This is for informational purposes and is not investment advice. Figures come from company disclosures and exchange data; valuation ratios reflect the author’s calculations based on cited inputs.