For-Profit College Officials say Federal Scrutiny Could Make Businesses Stronger

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Career Education Corp., based in Hoffman Estates, was enjoying record enrollment until late last year, when its schools started to see fewer students clamoring to get in, a turning tide common across embattled for-profit colleges. Career Education announced in January that it intended to lay off 600 workers nationwide.

Negative publicity and increased scrutiny by the government were contributing factors, along with the continued sluggish economy and more competition for students among schools, said Mark D. Spencer, spokesman for Career Education, which employs about 4,100 people in the Chicago region.

It wasn't alone.

Rasmussen College, which employs about 300 at its Chicago-area schools and a major business office, axed plans to build a fifth campus in Illinois and laid off 5 percent of its workforce nationwide because of uncertainty about how the Department of Education would crack down on practices of for-profit schools, said J. Michael Locke, chief executive of Rasmussen Inc.

"It was connected to this regulatory uncertainty and the lack of visibility on what the future holds," he said.

Still, as controversy and scrutiny has swarmed nationwide about for-profit careers schools, those with a significant presence in Chicagoland say they are weathering the storm, and they might just end up better off for having endured.

"This period of regulatory change and uncertainty is an opportunity to enhance our programs, processes and systems," Spencer said. "In the end, our schools will emerge even better prepared to meet the needs of our diverse student populations."

Career Education and Downers Grove-based DeVry Inc., which employs some 3,200 people in the region, are two of the biggest for-profit schools in America. Both are publicly traded, and DeVry is included in the S&P 500 stock index. It operates schools under the DeVry name and several others, including Chamberlain College of Nursing, Carrington College and Ross University.

DeVry's stock price reflects the turmoil of the past couple of years. The price hit a high of about $75 per share in the spring of 2010, only to plummet to less than $40 by fall. It has since recovered and is trading at about $56. The price got a big boost in early June when Department of Education regulations were released and found to be less severe than investors feared.

DeVry spokesman Ernie Gibble said the school will be able to handle the new regulations. Its schools already offer information about graduation rates and career success.

"Ultimately, we believe that if we focus on our students and their success, the rest will take care of itself," Gibble said.

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Chicago Tribune