Anything resembling a business-minded approach to learning was once argued to have no place in the higher education world. This philosophy, popularized by administrators at traditional colleges and universities to undermine career education, has been almost completely stifled in the current economy as four-year schools focus more and more on ways to lift budgets from the red. Apparently, both higher education and the world have changed.
In a near-complete role reversal, the business-infused style that career colleges follow has been a saving grace. The sector has channeled record numbers of graduates into growing career fields in recent years, while four-year institutions struggle. Labor projections might look weak for the foreseeable future, but career colleges are thriving with a focus on providing quality education – and on employer relationships. The sector’s focus on placement has been a strength for it in the past, and in the shrinking U.S. labor market, the career college sector has a built-in recession-busting approach that positions it well for any challenges it might face in the placement arena.
The numbers facing all institutions of higher learning are daunting. Last October, the Bureau of Labor Statistics estimated that during a 12-month period from March 2008 to March 2009, the economy lost 5.6 million jobs. At the time, there were about 130.1 million civilian jobs in the economy – 8 million jobs or 5.8 percent below the peak reached when the recession began in December 2007.
As is typical in any sluggish economy, thousands of Americans have returned to college for additional training to more firmly secure their careers or train for new careers with brighter long-term outlooks. Amid it all, traditional colleges and universities and career training-oriented institutions are still graduating students.
Given the contrast between graduates and the lack of available jobs, it wouldn’t seem long before schools of all types end up facing issues nationally in placing students. For career colleges that face the challenge of meeting stringent placement rates for their programs – usually in the 70 percent or higher range, depending on the program – the economic situation could be potentially devastating. But despite the nation’s economic trouble, career colleges are finding a focus on placement to be more than just a fallback.
“The mission of career colleges really shines in this kind of environment because we are focused on providing a quality education that leads to a career which ultimately changes the lives of our graduates,” said Sue Ream, Vice President of Career Services for the Career Education Corporation in Hoffman Estates, Ill. “In an environment in which people are looking for employment at a new level, what we do is highlighted – it makes us stand out among traditional colleges and universities because our focus on careers provides a real service to the general population. What differentiates us from traditional colleges and universities is that we start with the outcome, the career, and develop our programs and services around achieving that outcome.”
Likely, the struggles that have included budget cuts for that sector of higher education will continue. Career colleges were the first to evolve their programs around the labor market and to focus their career outcomes on burgeoning areas of employment. In today’s world, think healthcare and especially green technology. Educators in the career training realm have been more sensitive to market needs in terms of course offerings, while in the four-year school realm, there has been little change.
Career colleges are succeeding not necessarily by changing their approach to placing graduates; this has been their focus all along, Ream said.
“We use the same plan, but we execute it more stringently,” Ream said. “Even in a market where jobs are rolling in and you barely have enough time to field requests, reaching out to employers to build long-lasting, deep-rooted relations is foundational to our graduates’ success. In today’s leaner market, employer partnerships must take on an even higher level of importance in the process.”
Ream’s theory proves correct even in the nation’s most troubled states, where career colleges are finding success in the placement race. Once an economic powerhouse, Michigan was built on the strong backs of auto workers, many of whom never finished high school. Now, due to the forces of globalization, many Michigan communities are hurting. The cars that automakers were producing suddenly weren’t wanted by buyers. Many of the state’s cities were largely devastated. And, the innovative minds state leaders had hoped would help rebuild the state into the technology and life sciences hub of the Midwest have booking it out of the state’s top universities for better opportunities.
For a career college in hard-hit Detroit that specializes in providing its graduates with training for careers in radio, television and other news mediums – positions often seen within larger corporate organizations that need to cut costs and non-essentials – struggles with placement could seem inevitable.
Last year, the Specs Howard School of Media Arts beefed up its already sizeable Career Services department from a four-person team to six in order to place its radio, television and graphic students into careers. While other schools nationwide are beginning to see issues with placement, Specs Howard is continuing to evolve despite its tough Michigan ties and its programming. The key to its growth, said Dick Kernen, Vice President of Industry Relations with Specs Howard, is expanding the school’s relationships to new employers and discovering new career avenues for its students.
“For example, newspapers are increasingly placing more (multimedia) content on their web sites,” Kernen said. “They are no longer just editorial. They contain video. In Detroit, believe it or not, we had a newspaper win an Emmy for a story they compiled along with a local television station they partner with. That’s an area we’ve been very excited to explore.”
Kernen said Specs Howard has been successful in placing graphic design students into local news stations to prepare graphic treatments for nightly news casts.
“Have you ever noticed the tremendous amount of graphics that go into an average news telecast?” he asked.
Another unexpected avenue that has proven successful, he said, is placing video students with local radio stations and hospitals. Kernen said radio stations promote concerts, attend other community events and cover those events in ways similar to television journalists.
“We’ve been placing students for 40 years, and we’ve never had placement relationships with hospitals,” Kernen said. “So, why are we doing it now? Well, they need skills our grads have. We can’t rely solely on radio and television programs anymore. Hospitals use video for training purposes, so they need people trained to shoot and edit video.”
Since its inception in the mid-1880s, the career college sector has aligned itself with the needs of the job market and superseded its four-year counterparts in achieving higher placement rates. According to the U.S. Department of Education’s National Center for Education Statistics, 62 percent of career college students who attended two-year or shorter institutions graduate within six years of enrolling. At community colleges, over the same time span, 38 percent of the students graduate, and 46 percent drop out.
Concerns about placement issues could be one of many topics to eventually impact career education stocks in the future. An announcement about the SEC’s inquiry into the University of Phoenix’s accounting practices followed by speculation about negotiated rulemaking discussions on Capitol Hill sent education stockholders into a tizzy last year. So what if giant school conglomerates like EDMC (this is just an example) were to see placement issues fall below requirements? What then?
By its nature, the career education sector is already better positioned to outstay the effects of the placement challenge, said Jay Hollowell, Vice President and Training Manager at MaxKnowledge Inc.
“Our sector is already a leader in the skills training market,” Hollowell said. “Today, in addition to assisting graduates with their career initiatives, we have a more full-service approach to career services and to employer needs. We also understand our support roles internally. With graduates, we manage their expectations and create professional relationships with students from the very beginning. Upon graduation, they have employable qualities and attributes to offer in addition to the trade or technical skills they
Hollowell is an expert on career services and placement strategies, and he can attest to the fact that placement is a hot topic these days. Hollowell, who helped lead career services efforts among other initiatives for Bryant and Stratton for 10 years, conducted a placement session at the Career College Association Convention & Exposition last June. He has also led workshops for the California Association of Private Postsecondary Schools and has already signed on to do the same for the Pennsylvania Association of Private School Administrators this winter.
He said schools that have repositioned their partnerships with employers, graduates and their own internal departments are the most successful in creating placement opportunities. In fact, his workshops are often based on these three relational concepts.
“Career schools used to operate in silos,” Hollowell said. “Admissions enrolled, academics trained and placement offered job search services. The departments simply were not communicating with one another. Now, placement is more about sharing information. It needs to be viewed as the responsibility of everyone, not just career services. Any information or skills that help make a student more employable is of vital importance, and the process begins as soon as they walk in your door.”
No matter how many knocks might come, the career college sector is a house built to withstand the economy’s challenges. Graduates aren’t turned out with general degrees and left to decide how to benefit from them. They are trained for specific roles, they have specific skills, and it’s the leadership of career college institutions with a similar mentality – schools that know their roles – that has prepared them for the most challenging labor pool in a century.
What impact will the employment market have on for-profit colleges? No one knows for certain. Whatever the effects will be, it’s likely the nation will have more than enough time to see it coming. To interpret the shrinking labor pool and how schools might fare in the aftermath, we turned to Rene Champagne, former Chairman and CEO of ITT Educational Services Inc. for expert insight.
“Though we are beginning to see some economic recovery in the form of improved earnings reported by publicly traded companies operating in broad sectors of the national economy, the nation’s unemployment rate is 10.2 percent and rising. To date, the initial recovery from the severe recession of the last several years has been a jobless one.
“The unemployment numbers will continue to look bleak until employers stop laying off workers. Members of the workforce most negatively impacted to date by the rising unemployment rate are those without a college degree. College graduate unemployment rates are approximately 50 percent lower than rates for those who have not earned a college degree. Once employers stop downsizing their workforces, they most likely will begin using overtime hours before they move to adding manpower to their organizations. Only when employers feel confident that the national economy is truly in a recovery mode will they begin to add new employees, and I do not foresee that pattern developing for at least another three to six months.
“At the peak of the country’s strongest economy, the unemployment rate was 4.8 percent. Today, more than 15 million people are currently unemployed with a 10.2 percent unemployment rate. To return to the mid-single-digit unemployment environment, some 7-9 million new jobs need to be created. We can all make estimates on how many new jobs we believe might be created monthly in 2010 and future years. For example, considering the economy is still shedding jobs, let’s use several job growth projections for future years. First, let’s use a conservative estimate that calls for 100,000 new jobs being created, on average, for every month in 2010 and beyond, or a total annual new job creation of 1.2 million positions. If the economy does not accelerate job creation in subsequent years beyond the 100,000 new jobs per month, it will take approximately six years for the unemployment rate to be reduced to mid-single digits.
“In the second scenario, let’s assume a more optimistic view and project that our nation’s economy creates 200,000 new jobs every month for the foreseeable future (a very bullish estimate). In this approach, a total of 2.4 million new jobs will be created annually, and mid-single-digit unemployment could be reached in three to four years.
“What these simple exercises show is that unemployment rates are likely to remain high for three to five years. If this comes to pass, blue-collar working adults will continue to flock to colleges nonprofit two-year and four-year colleges as well as career colleges in hopes of gaining the education required for decent-paying employment. Higher education enrollments are likely to continue at above-average growth rates for the three to five year timeframe, and I believe career colleges will increase enrollment growth faster than nonprofit institutions due to their curricula being more focused on preparing graduates for the 21st century workforce and career search services offered to graduates being more prevalent in career colleges.
“In this challenging unemployment period, being what can we expect for college graduate employment success? In my opinion, employability of college graduates from all sectors of higher education will be impacted, and the time required for a college graduate to find employment may move from approximately six months following graduation to closer to 12 months. Will this challenging employment market begin to slow enrollment rates of new students? I do not believe it will negatively impact new student enrollment as blue-collar, non-college-educated working adults are suffering most with unemployment rates exceeding 11 percent. They have limited options, either remain unemployed or underemployed, or enroll in postsecondary education in hopes of qualifying for a better employment opportunity when the economy turns more positive.”
By Kevin Kuzma