Amanda Viveros arrived at Indiana University last fall eager to become a Web designer. But the courses she sought were full.
So the freshman from Hammond transferred from the Big Ten school to the private International Academy of Design & Technology, which has 2,400 students at its “campus,” three floors of a downtown Chicago office building.
“Why should I pay $16,000 to take a few English classes?” said Viveros, majoring in interactive media. “Here I’m learning what I need to know to be a Web designer.”
The International Academy is a for-profit college, a sector long viewed as higher education’s ugly stepchild and now gaining acceptance amid a sour economy. These schools, which number about 800 and counting, offer a practical, no-frills education. A major attraction: Job placement rates above 80 percent. That’s especially enticing when even newly minted MBAs can’t find work.
Demographic trends play a role in growing enrollments, as the children of Baby Boomers hit college age. But the industry, led by two Chicago-area for-profit systems, DeVry Inc. and Career Education Corp., also is aggressively targeting teens by sending recruiters into high school classrooms offering scholarships and heavily marketing on television and the Internet.
At Hoffman Estates-based Career Education, parent of the International Academy, the number of students under age 21 surged 14.5 percent between 2001 and 2002 at its 51 schools nationwide. Its schools offer degrees in career-track fields, such as business, culinary arts and fashion design. One-third of its more than 50,000 students are now under 21, bucking an age-old perception that the for-profit industry caters only to older students returning to school.
“These schools are becoming more of an increasing choice for higher education,” said David Ward, president of the American Council on Education. “They’ve done a good job of meeting the needs of students who know exactly what they want to do.”
But Ward is quick to add that for-profit colleges remain a niche in higher education. Out of 13 million undergraduates attending college, only 400,000, or 3 percent, attend for-profit schools, according to BusinessWeek magazine.
“We don’t see ourselves in direct competition with those institutions,” said Mark Rosati, spokesman for the University of Illinois at Chicago, where fall enrollment was up about 7 percent over 2001.
Nevertheless, traditional four-year schools are vulnerable, say executives in the for-profit industry. Revenues of public and most private colleges are not keeping pace with the rising costs of education. The public systems are being squeezed as many state governments face their worst budget crises in 60 years. Private colleges are crimped by falling endowments and donations.
Funding cuts have prompted layoffs, elimination of faculty spots and cancellation of core classes, including English and history, that students need to graduate. At the same time, tuition keeps rising. After losing 900 faculty and staff positions, University of Illinois officials raised tuition 10 percent for fall 2002, and another increase is likely this year.
“Traditional schools are sitting with record-breaking enrollments, and now they are cutting back,” said John Larson, chairman and chief executive of Career Education. “Somebody has to fill the void.”
This year, Career Education plans to open culinary schools in Atlanta and Las Vegas and two other campuses in Detroit and Houston. DeVry’s Houston campus, scheduled to open in the fall, will become the company’s 26th undergraduate facility. The schools typically charge about $12,000 to $15,000 a year in tuition.
For-profit universities flourished in the 1990s as schools fed off the explosive demand for technology-related jobs. By cutting frills, including sports, student centers and summer vacation, these schools wowed investors with profit margins of 20 percent to 30 percent.
The growth and success in placing students into jobs gave the schools newfound respect. That’s a big turnaround from the 1980s, when they were accused of offering substandard education and had to fight for acceptance.
When the tech bubble burst, some schools that relied heavily on technology and business programs, such as Oakbrook Terrace-based DeVry, suffered declines in enrollment.
Last year the company combined under the DeVry University banner the DeVry Institutes of Technology, founded as a Chicago trade school in 1931, and its Keller Graduate School of Management. The name change will help erase any lingering perception of DeVry as a trade school and help convey that it offers a range of bachelor’s and master’s programs, said Ronald Taylor, president and co-CEO.
But don’t expect DeVry or other for-profit schools to begin adding Ph.D. programs or focus on research, which are the distinguishing features of traditional four-year colleges.
“Some people say you can’t be a university without Ph.D. programs,” Taylor said. “We produce capable graduates who perform well on the job. We are a university.”
Edwin Magno, 32, graduated from DeVry in 1996 with a bachelor’s degree in electronics engineering technology after transferring from UIC. He had four job offers upon graduation.
“It was more hands-on experience at DeVry,” said Magno, a lab support engineer at Lucent Technologies Inc. in Naperville, Ill. “Recruiters were eager to hire grads.”