For-profit career colleges are big business in Texas and here in El Paso.
They are economic engines that are crucial for business prosperity, according to a new analysis by the Perryman Group, a Texas economic research firm.
Career colleges have expanded aggressively in El Paso, as they have nationwide.
Yet demand from local employers for career college graduates continues to outstrip the supply.
Some large employers in El Paso report they often have to send employees out-of-town for occupational training programs to get key certifications, although they are doing so less often.
It’s a somewhat surprising phenomenon in a city better known for exporting its talent.
“I have clients who need technical people and get calls weekly. I don’t know where they all are or where they are going, but they are hard to find,” says Barbara Walker with Cisco Systems in El Paso.
But with growth, criticism of the career college sector has increased, and the federal government has begun to crack down.
Career colleges make the case that they are the cheapest way to educate workers. That’s more important than ever, they argue, as employers demand more educated workers, the job market becomes more competitive and state budgets have dwindled.
The Perryman Group study released last fall was funded by Career Colleges and Schools of Texas, a state association. The study looked at the impact of career college graduates on business activity in Texas.
It says that the economic gains in El Paso include $232 million in annual business output and 2,934 permanent jobs. Statewide, the annual business output is $9.4 billion, with 116,910 jobs.
Graduates in medical fields are the most significant source of business activity in El Paso, leading to $214.3 million in total expenditures and $116.3 million in business output each year, as well as 1,563 jobs.
The study also compares the costs between community colleges, subsidized by the state, and for-profit career colleges.
The resources required to produce one graduate prepared to enter the Texas workforce are 20 percent lower for career colleges and schools, according to the study.
While it can take a number of years for a university to bring a new degree program to market, career colleges can typically respond much faster, says Christopher King, a labor economist at the LBJ School of Public Affairs at the University of Texas at Austin.
Western Technical College can bring a program to market in El Paso in as little as six weeks, says Mary Cano, director of the local Western Tech campus.
“We don’t go through a lot of the red tape public institutions have to,” she says.
Career colleges, much like community colleges, typically work closely with employers to identify what programs are needed and conduct feasibility studies to determine if there is a demand for a program before launching it.
That means career college graduates sometimes have a better chance of finding a job upon graduation.
Ana Maria Piña Houde, CEO of Anamarc College, says more than 80 percent of their graduates find a job in their field upon graduation.
But tuition is higher on average at for-profit colleges than public colleges, which are subsidized by the state. As a result, students attending career colleges typically graduate with more debt.
As the industry booms, concerns about rising student debt prompted the Obama administration to release new rules last year that occupational training programs must follow or risk losing access to federal student aid.
Schools must ensure the annual loan payment of a typical graduate doesn’t exceed 30 percent of their discretionary income, or 12 percent of their total earnings. And they must ensure at least 35 percent of former students are making their loan payments, according to the U.S. Department of Education. Historically, the number of students who default on student loans has been significantly lower at some career colleges in El Paso than at local public institutions. But data from the Department of Education reveal a troubling trend.
Fueled by rising unemployment among college graduates, default rates at career colleges nationwide spiked in 2009, the most recent data available, and El Paso was no exception.
While 10.1 percent of borrowers at El Paso Community College defaulted on their federal student loans between Oct. 1, 2008 and Sept. 30, 2009, 14.1 percent of borrowers at Anamarc College defaulted and 14.7 percent defaulted at Western Technical College in El Paso, the data show.
Only 7.6 percent of borrowers defaulted at the University of Texas at El Paso.
But comparing for-profit career colleges with public institutions is risky business, because it’s “like comparing apples and oranges,” labor analyst King says.
For instance, career colleges often serve riskier non-traditional students, such as working adults, single parents and low-income students, which may explain higher default rates.
“A large number of our students, 60 percent if not more, have tried college, have tried community college, and it wasn’t a good fit for them,” says Cano with Western Tech.
But career colleges can also be pickier about who they admit, King points out. And some here say they refer some applicants for remedial education at EPCC before they are accepted.
“We are in the business, yes, to make money, but not take money. We want to see these individuals be successful,” Cano says.
Career colleges can be a better place to start for those who might want to get an associate degree at a two-year school, before transferring to a four-year school to get a bachelor’s degree, says Jerry Valdez, executive director of Career Colleges and Schools of Texas.
Valdez says that El Paso’s schools have excelled in making the transition from one institution to another smooth, calling the city the “crown jewel.”
“El Paso has met and really exceeded what we have seen in other parts of the state in terms of articulation agreements,” he says.
Generally, articulation agreements are partnerships between colleges that ensure that certain classes a student takes at one institution will transfer to another.
“The college experience and a bachelor’s degree level education is always recommended, but realistically speaking, we must say that it is probably not the place to start for everyone,” Houde with Anamarc says.
Locally, career colleges are growing, and Anamarc opened its third campus located on the Eastside last March.
Western Technical College’s enrollment grew 7 percent last year, Cano says.
And New Horizons, the school that bills itself as the world’s largest independent IT training company, recently opened its first permanent location in El Paso.
EPCC has also been aggressively expanding its certification programs, including energy efficiency and renewable energy training programs.
“Certifications are going to be extremely important,” versus the traditional bachelor’s or master’s degrees, says Yolanda Chavez Ahner, EPCC’s vice president of workforce and economic development.
“Many employers now are looking for people with certifications who have hands-on work experience.”