From Princeton to DeVry

January 7, 2009

Harold T. Shapiro, former president of Princeton University and the University of Michigan, was recently elected chairman of the board of DeVry Inc., the publicly traded higher education company that owns DeVry University, Ross University and the Keller Graduate School of Management, among others. In an interview with Inside Higher Ed, Shapiro, an economist who also headed President Clinton's bioethics commission, discussed how he went from a skeptic to a believer in for-profit education, and the role he sees the sector playing now and in the future.

Q: While you’re moving into a new position of leadership on the board, your history as a board member at DeVry goes back to 2001. Can you discuss how you came to be involved with DeVry?

A: I really got interested in DeVry through a friendship with Dennis Keller, who was one of the founders of DeVry [and former board chairman]. And he was engaged in a project, that is building this market-funded education institution, which I thought had very limited prospects of success. I really thought that this was not such a hot idea, and as I got to follow it through Dennis over the years I began to realize that this was really interesting and it was reaching a segment of the population which wasn’t being as well served as it should have been by the public sector. So I became convinced that there really was a niche here for this kind of organization to play, and of course history has shown it has been very successful in doing that.

And if you look at the composition of the DeVry student body it’s really quite clear that it meets a very specific socioeconomic group on the average, which finds that this kind of organization really suits them.…

Market-funded higher education is always going to be a small part of total education. It’s never going to be a big part of higher education in this country, but it still fills an important niche in a market which wasn’t being served by others. So it got to be a more and more interesting proposition as time went on.

Q: You said initially you didn’t think the DeVry model was such a hot idea. What was it that you were concerned about?

A: Higher education is such a subsidized activity that it wasn’t clear to me that a market-funded organization really could overcome the competition represented by these very large subsidies. Now what’s happened over time, of course, is these subsidies have declined as states have had different kinds of priorities or have had budget constraints of one kind or another; the subsidies to higher education have gone down very substantially.…

Yes, I thought that a private organization could [possibly] be more effective, it could be more nimble, it could be more efficient in certain ways, but I just thought that wasn’t enough to overcome the subsidy [disadvantage]. But I was wrong. They found a way to operate extremely efficiently and now increasingly through the online service and the broadening of the curriculum they have found niches out there that just weren’t being served.

Q: When you talk about the demographics, the niche they might have been serving would have been adult learners. But is that broadening?

A: I think if you look at the demographics what you see is a much higher proportion of minority students than you find in most higher education institutions, people who need to work full time … people who really can’t afford to take, for example, four full calendar years to finish. And they really want to finish sooner, and DeVry has found the mechanism through evening classes … online classes, where we can really enable them to graduate sooner.

And of course DeVry is not everybody’s choice, because it’s very professionally oriented. It’s trying to train people for specific kinds of jobs which seem to be in high demand at any particular time. So we are very conscious of needing to change our curriculum really rather quickly when the job market changes … and DeVry does have the capacity to change quickly.

Q: What do your colleagues who are still in public higher ed or more traditional areas say about DeVry?

A: They’re kind of fascinated by it. The for-profit sector, especially in offering degrees -- undergraduate and graduate degrees -- is tiny compared to what you might call the traditional sector. So it’s not any threat to anybody. [Those in traditional areas] certainly don’t look at it as a threat; they look at it as a combination of bewilderment, admiration, skepticism and so on.

Q: But you feel like there’s enough room for everybody in this mix?

A: Absolutely. Absolutely. My own view is there is a shortage of educational opportunities overall. DeVry can’t solve that problem, but I think the for-profit sector -- even though it’s growing -- will remain quite a small part of the entire enterprise. Most people in higher education hardly know it exists, let alone worry about us.

I think if you ask the average person in higher education, "How important is for-profit education?" the first response will be bewilderment. They don’t even know it exists. So I don’t think there’s any problem with sort of pushing other people out of the market. The need is larger than is being supplied right now.

Q: I would think someone with your background would look closely at things like quality. How did you come in looking at that and how have your views developed?

A: ...If you have a Ph.D. and you enter most universities and colleges, they assume you know how to teach and so on. We don’t assume that. We have a training program. We have an evaluation program; we have feedback on this, so we’re constantly evaluating -- almost month by month -- the quality of what we’re doing.

I don’t want to claim the evaluation is perfect or that we fully understand how to do it very well, but we do it as well as we can.…

We have a more standardized curriculum. And because it’s more standardized, we’re able to devote more time and effort to the materials in each course, teaching plans and so on.

Students at DeVry, within a particular program, may have somewhat less choice, because we’ve standardized our program. But nevertheless, this allows us to put more resources into those courses that we do have to try to ensure their quality and to try to ensure that we’re trying new things all the time.

Q: How are you gauging student outcomes?

A: One [way] is [examining] who gets employed at what salary and how do they do. That is one test. And we’re constantly monitoring that. Our test is do they get employed in the profession they prepared themselves for within, let’s say, six months of graduation or not. Of course, the overwhelming number of students do. It’s up in the 90 percentage points.

Now, we’re not in the business of training researchers or future scholars. Those are Ph.D. programs; that’s not our business. Nor are we in the business of providing broad-based education in the humanities, for example. If you want to study history of art, DeVry’s not for you. If you want to study languages, the really serious study of languages, DeVry’s not for you. We’re really focused on professional education one way or another, whether it’s the MBA or undergraduate degrees in electrical engineering, that’s where our focus is. So we have a narrower focus than the traditional comprehensive university.

Q: At a recent Career Colleges Association meeting, there was some discussion about a perceived bias -- in the media and general public -- against the for-profit colleges. Does the narrower mission contribute to that?

A: I think there’s a general skepticism that people that are in this for profit aren’t going to serve their students well. I feel the other way around, because if DeVry doesn’t serve their students, we’ll be out of business.

I was president of the University of Michigan. It’s not going out of business anytime in our lifetime. DeVry could go out of business in years -- not in decades -- if it wasn’t serving its students. So it has to pass a much tougher test than traditional higher education does. I hardly think we do it perfectly; I’m sure we have many improvements that we could make, but we’re always on the trail, always trying to do something.

…. If you look, for example, at how quickly we adapted to online education, we’re much more fully adapted to that than any traditional school that I know of. Now I don’t know them all, so maybe this is an exaggerated statement, but we have an extraordinary number of students who get their degrees partly in classrooms, partly online. The coursework that we’ve developed online in the areas that I’m familiar with, like statistics which I taught for a number of years [at other institutions], is really high quality.

Q: How close to the classroom do you get in your position, either out of curiosity or necessity?

A: I don’t actually attend classes. I do visit campuses, but I don’t actually attend classes. The closest I get is I sign up for some of these online courses.

Q: Really? What have you taken?

A: The ones I’ve taken most seriously are statistics.…

Listen, I’m not going to reveal my grade [laughing].

Q: What did you think of the class?

A: I really found it very effective. I can’t say that I learned something, because these were areas of statistics that I’ve been studying for years, so I can’t say I learned something new. But I compared it to the experience that my students had in my classes and I was convinced that someone doing this, together with the support that they get from their classmates and instructors, could actually learn this subject very effectively.

Again, statistics like all other courses at DeVry is focused on professional applications of the material -- because we don’t look at ourselves as training future statisticians. We look at ourselves as training students who can use statistical methods in the jobs that they’re going to have, and that’s a very different focus.

Q: Forgive me for talking about money, but you’re going to be pretty well compensated in this position. Is that an important factor for you?

A: I’ll be very frank with you: It’s not important. Because while I am well compensated and very grateful to be well compensated, it’s actually less than I can earn in some other positions.

Money is something, but it’s not everything. So that really wasn’t an important consideration in my view. I accepted this job before I knew what the compensation was going to be.

Q: Do you know exactly what you’ll make now?

A: I guess time will tell. I don’t really want to talk about that now. There will be proxy statements out eventually which will reveal all of this. … I really don’t know for sure [if statements are public yet], but I don’t want to be the one to make it public.*

*Public filings with the Securities and Exchange Commission showed Shapiro’s compensation, not including stock options, to have been $124,258 before he was named board chairman. His predecessor as chairman, Dennis Keller, had a total compensation of $502,175, but he is also a co-founder of DeVry.



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