For better or worse, the career college sector was founded by entrepreneurs, and thatentrepreneurial flame still burns
Thin white lines left from jet engines mark the flight patterns above Dallas/Fort Worth International Airport. Departing planes rattle the rock gardens and the palm trees in the circle drives of airportarea hotels, and the shrill liftoffs are audible even underwater in the deep ends of swimming pools.
Twice a year, a small group of the career college sector’s most established executives from across the country gathers at an airport in a city where one of their schools is located and talks shop. This club that they have dubbed the Private Education Research Council includes entrepreneurs with families who have been involved with career training-oriented institutions since the 1890s.
The group, which in the last few years has added the next generation of career college leaders, has regularly included Henry and Renee Herzing of Herzing College, Al and Glenn Sullivan of Sullivan University, Dean and Matt Johnston of Santa Barbara Business College, Don and Greg Jones of Southwest Florida College, and Ken and Jason Konesco of Indiana Business College. In the fall, they have a two-day policy review meeting, and in the spring, they meet for three to four full days to share ideas and best practices. The group has met yearly since 1976 without fail and has shared hundreds of ideas involving proprietary school administration and marketing.
Aside from familial connections, they are, in a sense, the few remaining entrepreneurs in a career college space that has gradually come to be dominated by private equity firms and large school conglomerates. They jokingly call themselves, “The Last of the Mohicans.”
Right or wrong, for bad or for good, the career college sector was created by entrepreneurs – executives who had an eye and ear for the latest trends and how to capitalize on them. One recent example has been the sector’s drive to outpace four-year universities in the online education realm, and that drive was led by executives with a deep understanding of career college students’ no-nonsense approach to education.
But with Wall Street and other big players buying up and consolidating career colleges, few individuals are putting their hats in the ring and starting their own institutions. Many current owners don’t realize what has always made the sector unique to the higher education realm, or even that it has a long, storied history rivaling that of traditional colleges and universities.
In the career education business today, the focus has become profits, market calls and answering to investors. The entrepreneurial spirit in which the sector was founded – that led to its substantial growth – is fading away.
The Private Education Research Council and its individual members are among the few executives keeping the sector’s entrepreneurial flame alive. Al Sullivan and his father founded Sullivan Business College in 1962 as a one-year business school that started with just seven students and five faculty members. Since that time, the business college has evolved into Kentucky’s largest private university system serving more than 8,000 students.
At times, Sullivan has more closely resembled a traditional non-profit four-year institution than a career college. The school once featured a basketball team that won four National Little Colleges Athletic Association national championships. But the key to the school’s growth, Al Sullivan said, is a sharp student focus and allowing growth to occur over a reasonable timeframe. Those luxuries are often undercut when schools sell to firms driven by Wall Street.
“When your focus is on next quarter bottom line, that impacts a lot of different decisions,” Al Sullivan said. “We’re not here to take profits and do things with them and be only interested in stock prices and short-term growth. It’s a different drive. We’re not going to let the fulcrum bend the wrong way. Ninety-nine times out of 100, we’re going to make the right decision for students even if that means not increasing the bottom line or even being profitable in the short term. Do we need to be profitable? You’re damn right. If you aren’t, you’ll never make it.”
Big money buying into the career college sector and looking to turn big profits quickly is nothing new. It happened in the ’70s and again in the ’80s, and each time, there was a reason that brought the cycle to an end. But now, with companies such as Corinthian, Career Education Corporation and Education Management acquiring large groups of schools and private equity firms investing millions, the stakes are considerably higher.
“I think the level of sophistication, the management operating schools and the level of dollars now almost make it a different magnitude,” said Henry Herzing, Chairman and CEO of Herzing College. “Does that mean that someone can screw it up in a big way or not get it right? I guess my optimistic side says this is the final chapter where we become a mature and accepted part of higher education, where there’s a higher level of investment in brick-and-mortar schools and also our intellectual capital. I think we’ll get it right this time, and that’s the scenario I hope comes out.”
Herzing made his own investment in career colleges in 2007. He and his wife Suzanne gave $500,000 to the Imagine America Foundation to fund scholarships and research studies to justify the sector’s contributions to the American workforce and students’ lives. During his more than 30 years in the business, he’s developed a reputation as the sector’s quintessential straight-shooter.
His roots in the sector run deep. From 1981 to 1983, he was President of the National Association of Trade and Technical Schools (NATTS), and he was the first Chairman of the Imagine America Foundation. While Herzing agrees that the sector has changed, he said it has not necessarily lost its entrepreneurial flame.
Sullivan has paid his own dues through a nearly 50-year career serving in various roles, such as Chairman of the ACICS (then AICS) Accrediting Commission, Chairman of the Board of AICS (the predecessor to CCA,) serving on the Board of NATTS, and being the first career college President to ever serve on the Board of the American Council of Education (ACE).
The next generation of Herzings and Sullivans and other career college families has already picked up the torch. And, those new leaders face a new environment perhaps more challenging than the sector has ever seen before.
Herzing said the next generation faces two conflicts: 90/10 and the cohort default rate. Both issues are clouding the role career colleges play in providing financial aid to students. But Herzing also suggests that sector has “definitely survived more difficult times in the past.” For someone who boasts such a deep background and fundamental understanding of career colleges, those reassuring words could echo through the sector as loudly as jet engines.
The moments that changed career colleges forever
So, as new players with non-educational backgrounds step into the career college sector, it’s no wonder that the history of for-profit education is fading. But that doesn’t mean they can’t catch up with a quick cramming session. The editors of Career College Central compiled this CliffsNotes version of the biggest moments in the sector’s history that newbies (or anyone else in the biz, for that matter) should know forward and backward.
Duff’s Business Institute founded In the beginning, there was Duff’s Mercantile College. Established in 1841 by Peter Duff, Duff’s is still operating in Pittsburgh, Penn. Although its ownership and name have changed several times, it is recognized as the oldest private career college in the United States. Duff’s Business Institute, now Everest Institute, is chartered by the Commonwealth of Pennsylvania. From California to New York, Everest Institute has campuses located across the continental United States.
The invention of the typewriter Long before the Blackberry rose to prominence, people actually had to be taught on devices requiring all 10 fingers, not just thumbs. Once Christopher Latham Sholes invented the first successful typewriter, writing by hand was a thing of the past. Many male clerical workers refused to give up longhand and adapt to the new technology. (Isn’t that just typical?) But, the tremendous growth of business paperwork ensured that the time- and labor-saving machine was here to stay. The invention of the typewriter expanded employment opportunities for women, increased the productivity of business offices, and helped career education flourish. Sholes would roll over in his grave if he could see the latest technology. From the much-anticipated iPhone to webcasts and computer technology, career colleges keep searching for the next best thing.
The founding of the National Association of Trade and Technical Schools (NATTS) Maybe it wasn’t as huge as the signing of the Declaration of Independence, but in 1965, career college leaders convened to debate and solidify the sector’s future. Private school educators representing 35 schools converged on Chicago to form the National Association of Trade and Technical Schools, an organization that would alter the course of private and technical education forever. Standards, accountability and accreditation were made top priorities.
Women enroll Since the early 1900s, women have been working toward closing the gender gap, becoming more aggressive in their quest for equality. In the 1970s, they expressed the need for equal recognition and equal pay in the workplace. Such changes have had and will continue to have a profound impact on our society and economy. The number of female students attending college has increased since 1979 due in part to changing gender roles.
Birth of the Career Training Foundation After NATTS President Jack F. Tolbert died, the idea of the Career Training Foundation (CTF) was formed. Now known as the Imagine America Foundation, it was built for research, training, distribution of research reports and publishing. More than $37 million in scholarships and awards have been provided for students in the last seven years. In 2004, the Imagine America Foundation established the Military Award Program, which is a scholarship available to any qualified active duty, reservist, honorably discharged or retired veteran of a United States military service branch.
NATTS and AICS consolidate The sector’s predominant association was spawned from this consolidation. In 1991, the National Association of Trade and Technical Schools and the Association of Independent Colleges and Schools united and adopted a new name: the Career College Association (CCA). Today, CCA has over 1,400 member schools serving nearly 2 million students, making it the largest organization representing private career institutions.
Introducing the Higher Education Act Yes, the recent reauthorization of this bill took more than three years (which is longer than it takes some students to get a degree), but it’s still a landmark for career colleges and traditional colleges and universities alike. The Higher Education Act (HEA) was developed to make eligibility requirements stricter for private career colleges. The original draft split the Career College Association and the sector’s accrediting bodies into separate organizations whose functions were not interdependent on each other.
School consolidation Corinthian Colleges (CCi) CEO David Moore led the company in becoming one of the major corporate entities buying and consolidating schools. In the same fashion that some companies manage portfolios of products, CCi was managing a portfolio of campuses. In its 13-year existence, CCi has expanded considerably through acquisitions and internal or organic growth, while also trimming what’s not profitable. The company has acquired 76 colleges and opened 34 branch campuses since 1995. Operating in the United States and Canada, the company operates 91 schools in 24 states and 17 schools in Canada. More than 72,000 students attend Corinthian schools.
Rise of the Phoenix Cool logo, aggressive marketing tactics and an innovative approach to education: The emergence of University of Phoenix (UoP) is a landmark all its own. The school became the most familiar presence in career education by posting banners on seemingly every web page on the Internet, then placing its name on an NFL franchise’s football stadium. UoP rose to prominence in the online education realm, offering a realistic option to brick-and-mortar campuses long before other colleges – traditional or otherwise – bought in on education at home, via the Web. Today, UoP is the largest private university in North America with nearly 200 locations and Internet delivery in most countries around the world. Now the university has more than 100 degree programs at the Associate, Bachelor’s, Master’s and Doctoral levels in much-desired employment areas, from business and technology to healthcare and education. Thinking ahead? Pretty much.
Diploma mills and worthless degrees It can’t all be good news. The Reagan era wasn’t so friendly to the perception of career colleges. In the late 1980s, federal investigators found evidence of abuse at several career colleges that were set up as diploma mills to amass federal student aid. Of course, the majority of career training-oriented colleges at the time offered solid training to students, but reports of the unscrupulous ones overshadowed the practices at the others. At schools using dirty practices, unprepared students were signed up for thousands of dollars in federal loans and grants, which the schools received upfront as tuition. In exchange, the students received poorly run courses. The fallout from this event resulted in negative associations with diploma mills and career colleges that continue to this day.