Interview conducted and condensed by Jeff Bailey
Your specialty was online commerce, and you came to DeVry in 2002. Within four years, you were named CEO. Now you run one of the largest for-profit higher-education companies in the United States, but your industry has of late come under fire for aggressive recruiting, over-reliance on federal money to pay tuition, poor debt repayment by students, and unsuccessful results in careers of graduates. Ever wish you were someplace else?
Never. I love working in education. One of the things that appeals to me is applying the best practices of the world of business to the endeavors of life. Bringing customer service to education. Your call should be answered in 20 seconds or less. We’ve benchmarked ourselves against retailers and hotels.
It looks like business is good. Profits rose 69 percent, to $279.9 million, for the year ended June 30th. But your stock has been hit hard, sinking from about $74 in April to as low as about $37 in August. Is that entirely due to the federal government reassessing the performance of for-profit schools, given that 74 percent of your tuition comes from federal programs?
The driver has been the regulatory uncertainty.
People getting two-year associate’s degrees at for-profit schools wind up about $14,000 in debt, according to the Department of Education. Yet most who attend community colleges finish without having borrowed at all. Your own annual report says, “In fact, many local community colleges offer programs similar in content to DeVry University’s associate degree programs, but at a much lower tuition.”
You can make the same argument for the bachelor’s degree [also offered at DeVry]. It’s more expensive than in-state tuition at a public institution. We don’t have the [taxpayer] subsidy. So why would someone choose that? One, speed to degree: A student can get a bachelor of science in nursing, a four-year degree, in three years at our schools. Also: small class size; 150 career service professionals. You pay more, and you expect a level of customer service.
What about debt repayment? Eighty-eight percent of borrowers at nonprofit schools in recent years were able to make their minimum interest payments and pay down some principal, but only 55 percent of borrowers who went to for-profit schools paid beyond the minimum.
It’s entirely a function of the students we serve. They don’t have family means to help them out. More are first in their family to go to college. More are minorities.
I Googled quite a bit but didn’t come up with your graduation rates.
At DeVry University Illinois it is 34 percent. By the way, Roosevelt is 41 percent; Columbia, 34 percent; Northeastern Illinois, 18 percent; and Chicago State, 13 percent. We’re comparable to other institutions that serve a similar student body. [A spokesman said later that graduation rates would be on DeVry websites soon.]
Where did you go to school?
University of Michigan—bachelor’s and master’s in industrial engineering. Harvard Business School for the MBA.
Paid ’em off. My wife’s, too.
Photograph: Bob Stefko
7 months ago