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Hire Education

Saturday, April 1, 1995

S peaking in Galesburg, Illinois, in January, President Clinton proposed a federally funded job-training program "to keep the American Dream alive in the 21st century." Cost to American taxpayers: $3.5 billion a year.

If he had driven about an hour north, Clinton could have visited a college campus that proves his program is unnecessary. DeVry Institute of Technology, headquartered in Oakbrook, Illinois, makes a handsome profit by offering a first-rate technical education to working-class students. This little-known school shows how private businesses outperform government in providing good job training.

On 13 campuses from Atlanta to Los Angeles, more than 15,000 students--35 percent of whom are black or Latino--are earning their bachelor's of science degrees at DeVry. Ninety-four percent of the school's graduates land jobs in their fields of study within six months, with an average starting salary exceeding $24,000 a year.

DeVry's alumni enjoy cutting-edge technical careers. At Hughes Communications, the nation's largest satellite company, 22 of the 30 engineers responsible for orbit maintenance are DeVry graduates. KLA Instruments, which designs quality-control systems for the manufacture of microchips, boasts that a fifth of its 1,000 employees graduated from DeVry. All this at an annual cost per student of $2,500 less than similar state-run programs.

And DeVry posted a $12-million profit on revenues of $211 million last year to boot.

Selling Job Opportunity

Since its founding in 1931 by Herman DeVry, the inventor of the portable motion-picture projector, the institute has specialized in technical training that leads to lucrative careers. DeVry, which grants accredited bachelor's degrees, is a for-profit venture whose stock trades on the NASDAQ exchange. In short, it sells job opportunity.

Five years ago, when Zaneta Rizzo graduated from a small high school in rural Louisiana, she "knew less than nothing" about computers, thought DOS was pronounced "dose," and was terrified of automatic-teller machines.

After two years of bouncing among jobs in fast-food restaurants, Rizzo enrolled at DeVry's Dallas campus. Recently she graduated with a bachelor's degree in computer information systems and is deciding between several job offers with computer-training firms. Before DeVry, Rizzo's salary peaked at $760 a month. Her current offers are for $25,000 a year--a 275 percent pay hike.

When Jeri Gomez graduated from high school near Fresno, California, she enrolled in a local community college to study the health sciences and dance, but classes were constantly being canceled, so she enlisted in the army. After serving in Desert Storm, Gomez enrolled at DeVry's Pomona campus. She is now deciding among several job offers in software programming that pay more than $30,000 a year.

Rizzo's and Gomez's stories are typical of DeVry students, many of whom field multiple job offers before their commencement. In fact, more than 95 percent of engineering and accounting majors are placed in their fields within six months of graduation--a success rate many of the nation's top schools never approach. How does DeVry do it? By running the college like a business.

Unlike most colleges, DeVry receives no direct government money or alumni gifts. Nearly all revenues, and therefore profits, come from tuition. And DeVry has found that the best way to attract more students--over half of whom are the first in their families to attend college--is to secure high-paying jobs for graduates. Dennis Keller, DeVry's chief executive officer, says the school avoids anything that doesn't help students find careers.

To this end, DeVry maintains an enormous placement system with more than 100 staffers and a database of thousands of employers. While most other schools in the country assign placement officers to handle a broad spectrum of careers, DeVry has found that employers prefer to communicate with staffers who understand their particular needs. For this reason, each officer is trained in a specific field. For instance, Motorola-- which is based near DeVry's DuPage County campus in northern Illinois--works closely with staffers specializing in telecommunications. The payoff has been tremendous. When the electronics giant was planning a major expansion in Illinois, it consulted DeVry placement officials in advance to secure an educated labor force.

DeVry also edges out the competition by studying labor trends, nationally as well as in the local markets near each campus. DeVry does not depend on the federal government's research, which is mostly retrospective; its researchers analyze new and growing fields. Using data from interviews with small and large employers, annual alumni surveys, and more than a dozen local-industry advisory panels, DeVry graduates can target rapidly emerging areas that traditional schools miss. Relying on data from the Bureau of Labor Statistics, for instance, most colleges until recently paid little attention to the cellular industry. DeVry officials, on the other hand, adjusted their telecommunications curriculum eight years ago to include this technology, and subsequently launched the careers of many graduates. "Health care is the next big one," says Norman Metz, a senior vice president at DeVry. "We are currently focusing on the medical-equipment industry that will handle the graying of America."

Despite these unsurpassed placement results, the Clinton administration has frowned upon for-profit schools like DeVry, insisting the capitalist model leads to a useless education. At a 1993 press conference, Labor Secretary Robert Reich told journalists to be wary of these institutions, claiming that they mismatch thousands of students, and that there is no market for their degrees. Reich's warning was reiterated by the media, including the Cleveland Plain Dealer, which urged some for-profit schools to carry "warning labels" detailing prospective students' chances of finding employment after graduation. In fact, if many state schools had to publish such information, students would likely flock to DeVry.

Blood, Sweat, and Jobs

Some for-profit trade schools, to be sure, are little more than diploma mills that give gullible students a shlock education. These schools usually go bankrupt when students catch on that their degree leads nowhere. But for an institution that is in business for the long haul, producing high-quality education for satisfied customers is essential to growth and profitability. Keller believes that every graduate represents the school: If an employer is unsatisfied with the quality of a single graduate's work, he is unlikely to hire from DeVry in the future. That would ultimately harm the bottom line.

To that end, the school maintains a demanding curriculum that students call "brutal" and Keller calls "tough love." It is a no-frills, lots-of-sweat education. The rigorous process begins even before the classes start. Although the school accepts SAT and ACT test scores--applicants average at the 45th percentile--all students are required to take DeVry's admissions test in math. About 14 percent of the applicants fail the exam. Of the remaining students, about a quarter are admitted on the condition that they take remedial classes. Applicants are also required to take a College Board English test that determines their placement in humanities courses.

From the first day, students follow the curriculum in lockstep. There are no electives. Students immediately choose a major from among five fields: electronics- engineering technology, computer information systems, business operations, telecommunications management, or accounting. Each major requires eight or nine semesters, and can be completed in three years with summer school.

Students and DeVry's senior management both prefer this inflexible system. Like a manufacturer, the school desires a reputation for providing a consistent "product"; students say they enjoy receiving firm direction. "This gets rid of a lot of the time- wasting filler classes, like underwater basket-weaving, that people take elsewhere," recalls Rose Huening, a 1986 graduate.

Heavy Lifting

Here there is no time to waste. Each term, DeVry students take at least four classes, plus labs, often exceeding a conventional courseload by four to six credit hours. The first-year courseload for computer information systems is typical: five computer- science classes, four computer labs, two math courses and a math lab, two English courses with one writing lab, an economics course, a psychology course, and a business course. In addition, since many of the students have never before been pushed to work so hard, all freshmen enroll in a class on "success strategies," which teaches study skills and time-management techniques.

George Dean, the vice president for educational planning, believes that many traditional colleges waste a great deal of energy embracing new teaching methods. DeVry doesn't mandate teaching methods--professors can choose whatever textbooks they want--but the level of academic expectations is set at the head office, and it's set high. "At the end of the course, the students have to be able to do x and y and z," Dean says. "If it works better at the Columbus campus to teach it z then y then x, it doesn't bother me."

Dean is comfortable giving the professors ample latitude because they are required to gain real-world experience in their field, and so tend to prefer the most practical methods. Although some students earn money for tuition by assisting faculty members, they are prohibited from teaching, and are usually limited to grading papers.

Unlike trade schools that teach specific skills (many of which become obsolete as technology changes), DeVry's curriculum focuses on teaching students how to reason. In many ways, DeVry offers the liberal-arts version of a technical education: students learn how to solve technical problems. They are drilled thoroughly on the basics, and required to spend countless hours in the lab to build an educational foundation. On exams, students are rarely asked straight-forward mathematical questions; instead, they are usually given detailed descriptions of real-world problems, including information they must recognize as extraneous. Dean claims that this education prepares students to operate efficiently in the business world. Furthermore, teachers will fail students whose lab reports are not written in proper English, regardless of the experiment's outcome. DeVry doesn't shortchange the humanities, because these non-technical abilities will be vital to the students' careers. Alumni routinely tell Dean that the technical skills get them hired and the reasoning skills get them promoted.

A student with a grade point average below a "C" is placed on academic probation, and prohibited from taking a relaxed schedule. If the student's g.p.a. remains below a "C" average the following semester, he or she is expelled. Every year, 20 percent of the student body flunks out. DeVry does not pamper its students en route to the diploma. "We have hard classes, but if that is not met with enough commitment to be successful, then it is detrimental to this company for that student to stay," Keller says. Huening's class is a perfect example: of the 325 students who started, only 94 graduated on time.

Just as auto manufacturers are constantly reviewing the efficiency of their cars, DeVry maintains strict quality control. About a decade ago, DeVry was reviewing each course every three years, which was considered swift compared to traditional schools. Now it rewrites each course at least once a year. During the summer term, faculty members visit hundreds of employers across the nation and find out what their needs will be in five to 10 years. Together with information offered by industry leaders on DeVry's dozen or so curriculum-advisory boards, the school sets new course requirements. For instance, a few years ago most computer-programming courses only taught a programming language called COBOL, but professors noted that firms near some of their campuses were switching from mainframes to desktop-based systems that require C language. After DeVry adjusted its curriculum, businesses responded by hiring more of its graduates. Although industry does not dictate DeVry's curriculum, the school must measure success and failure by its placement rate.

The institute's educational audit is exhaustive. DeVry's central headquarters evaluates randomly selected writing samples from students on every campus twice a year in order to ensure that writing skills remain high. The institute also administers standardized tests in electronics to be certain that technical skills are not dropping. Finally, administrators also investigate courses with unusual grade distribution.

The best evidence of the quality of DeVry's curriculum is the on-the-job success of its graduates. Bill Buglewicz, a senior manufacturing manager at KLA Instruments, recruits at six of the campuses every year. "DeVry students have a great work ethic, higher motivation, and initiative," Buglewicz says. "The courseload, in particular the exhaustive lab work, makes them wonderful thinkers and troubleshooters."

Gary Nuzzi, a 1983 graduate, says the lab work helped him and 1963 graduate Bill Blethen develop a revolutionary lighting system that won an Academy Award for technical achievement last year. The portable strobe light allows movie cameras to capture detail at high speed. "The education was, at times, very challenging, but very practical," Nuzzi adds.

The Bottom Line

Most remarkable, however, is that DeVry makes a profit. By defining its mission narrowly, the school has perfected its product and minimized waste. DeVry's cost-saving efforts are immediately evident. There are no ivy-laden academic halls or rolling greens. Rather, each DeVry campus holds its classes in an office building that is usually surrounded by a parking lot. In such a modern facility, little space is wasted, maintenance costs are moderate, and classrooms can accommodate professors from various departments. And the school runs three cycles of classes--morning, afternoon, and evening--to use the space more efficiently. The institute does not own any dormitories. Instead, DeVry leases housing near its campuses from local landlords and sublets it to the students at a modest profit.

DeVry also holds down costs by maintaining a narrow academic focus. DeVry does not fund any sports teams or clubs that are not directly related to job placement; on some campuses, students independently run intramural leagues by securing outside sponsors. "We are not trying to be all things to all people," says Kathy Perdue, head of the accounting department at the Atlanta campus. "We figured out what we do best, concentrating on the academics to get jobs, not filling social needs."

The school does not grant tenure to any of its professors, allowing it to respond quickly to fluctuating enrollments. Moreover, DeVry is not a research or publishing institution, so faculty members carry teaching loads two to three times that of other college professors. Finally, since the school operates at full capacity, even in the summers, professors are expected to work as they would in private industry: year-round.

DeVry maximizes tuition revenue by actively recruiting students through television and newspaper advertising, direct mail, and recruiters. A traveling sales force of 200 visits high schools and Army bases throughout North America, while another 100 salespeople respond to applicants who call DeVry in response to advertising. DeVry's $15-million advertising campaign promotes its focus on careers, profiling graduates with senior positions in prominent companies like Coca-Cola.

The individual cost-saving measures add up. The price tag of a DeVry education is $6,015 for two semesters, or $26,730 for the complete degree. By comparison, a four- year degree at public, non-research universities in the same states where DeVry operates costs much more in tuition and taxpayer subsidies: $40,148 in California, for instance, and $35,440 in Georgia.

As an accredited school, DeVry participates in all the same financial aid programs as public schools. DeVry's loan default rate is 17 percent--better than many for-profit trade schools and far below the government's intervention zone of 25 to 30 percent. Industry analysts note that the institute's job placement record and bachelor's degree program distinguishes it from trade schools.

For-profit schools such as DeVry are a model for the future of university education. As more adults return to school later in life, they will find they prefer the no- nonsense DeVry degree, which can be finished in three years. Currently the average age of DeVry students is 26. In addition, the number of high-school graduates is expected to keep rising through 2013. Combine that statistic with downsizing in the military, for- profit education's top rival for high-school graduates, and DeVry seems to enjoy a rosy outlook. In fact, the results are already beginning to show: Enrollment was up 4 percent this year, and the company added two new campuses. "Frankly, the demand is growing quicker than our ability to supply it," says Norman Levine, DeVry's chief financial officer. And two other for-profit college-education companies announced initial public offerings this year.

Despite DeVry's proven track record in securing jobs for working-class students, bureaucrats may prevent the school from expanding. In New York City, for example, the state's department of education has not yet approved DeVry's 1993 accreditation application. Once the department okays the school's academic standards, government analysts will determine DeVry's impact on established local schools. Every college in New York City will be invited to comment on DeVry's entrance into the market. If area schools fear DeVry will steal students from their tuition rolls, they can urge the department to reject the application. The Education Department's Bureau of Planning will also analyze whether the local job market can accommodate the future DeVry graduates. Department officials note that, due to understaffing, it normally takes several years for a school's 300-page application to be approved.

Even skeptics of for-profit education concede that public schools and private non- profits are unable to expand to meet the growing demand. Public universities would require greater tax subsidies to support a larger student base, and private non-profits would have to raise even more through alumni giving. "Time and time again, we have seen that the healthiest and best systems in the world involve private enterprise competing," says Keller. "We're the future of education."