As a result, I've decided to take a basket approach to this industry. Instead of picking one or two favourites, I've taken small positions in a few companies. If the industry is cheap (which I think it is), then the portfolio will probably do well even if a few falter. I would use this same approach if I was interested in the pharma space (because you don't know which company will come up with the successful drugs and which will fail) and financials (when discounts to book values are large across the industry, I couldn't tell you which banks are likely to fail and which aren't), for example.
Because many of the players in this industry have a lot of cash without a lot of debt, have beaten down valuations, and have single-digit P/E ratios despite big drops in revenue (while the cost-cutting has only just begun), I want exposure to for-profit education. I figured this was the lowest-risk way to do it.
Note that this only diversifies away company-specific risks. Overall risks, such as very stringent gainful employment regulations, will negatively affect all companies in this space. That's a risk one just has to take if one wants to benefit from the potential upside in this space.
Disclosure: Author has a long position in a few for-profit education companies