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Leila Abboud is a Bloomberg Gadfly columnist covering technology. She previously worked for Reuters and the Wall Street Journal.

Fresh-faced American students will arrive on campus in a few weeks to begin the new academic year. British education company Pearson Plc has a lot hanging on whether they actually buy textbooks for their courses, or if they opt for increasingly popular rental plans.

Pearson's Pain
The educational publisher's shares are down almost 20 percent this year
Source: Bloomberg

That's because after four years of cost cuts, layoffs, and the recent sale of a chunk of its stake in Penguin Random House, Pearson is more reliant on U.S. higher education than ever before. The business will account for roughly half of profit after the disposals, according to Ian Whittaker of Liberum Research.

Slimmed Down
Pearson will lose a big chunk of operating profit when it exits Penguin
Source: Company reports

Unfortunately, the traditionally high-margin business of serving co-eds is under structural pressure from the web and new competitors like Amazon. A stronger economy in the U.S. also means more people choose to work than study.

On Friday, CEO John Fallon said revenue from U.S higher education will fall about 7 percent this year and next. Fallon, who's been in permanent restructuring mode since becoming CEO in 2013, is trying to shrink the U.S. operation to cope. But with student behavior changing quickly, there is no guarantee that'll be enough to return Pearson to profit growth.

A necessary but painful cut to the dividend in has meant that investors are being paid less to wait to see if Pearson's turnaround finally pays off. Based on Friday's first-half dividend cut, Pearson will yield will about 2.2 percent this year, according to  Neil Campling from Northern Securities.

Dividend Pain
Pearson's dividend yield has shrunk this year
Source: Bloomberg

Given Pearson's poor track record on execution -- profit warnings have become an annual ritual under Fallon -- it's hard to have faith things will be different this time. The restructuring will see 3,000 jobs eliminated to help save 300 million pounds a year by 2019.

The success of Fallon's turnaround depends uncomfortably on the willingness of the class of 2021 to hit their books.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Leila Abboud in Paris at labboud@bloomberg.net

To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net