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A Private College Goes For-Profit

A Private College Goes For-Profit
March 17, 2010

Dana College, a small Lutheran liberal arts institution in Nebraska, announced Tuesday evening that it is being sold to a new for-profit company. The sale comes just a year after another Lutheran institution, Waldorf College in Iowa, was sold to a for-profit entity.

But while Dana's purchase is similar to a pattern in which some small traditional colleges are being bought, it may differ in other ways. The new owners say that their goal is to build the traditional liberal arts mission through on-campus programs, and not to use the college and its accreditation as a base for online operations. And the new owners not only say that current faculty members will keep their jobs, but that the college's tenure system -- which is not typical for for-profit higher education -- will remain in place.

The new entity that will run the college will be led by Niraj Kaji, who formerly was a vice president at Walden University, and C. Ronald Kimberling, who was formerly president of Argosy University's Chicago campus and held several senior positions in the U.S. Education Department during the Reagan administration.

In an interview, they stressed that they were committed to building up Dana in its current form as a residential college, with the goal of doubling enrollment to about 1,000 students. The new company has other investors as well, and some of them have experience in education, but they do not own other colleges. Kaji and Kimberling declined to discuss terms of the sale.

Kaji noted that the new company has not sought permission to offer online-only programs and that he is moving his family from Baltimore to live near the campus, which is outside of Omaha.

Janet Philipp, the president of the college, said that the board has been reviewing options to provide financial stability and decided that a sale was the best choice. "It was evident that we needed another option," she said. Enrollment has been stagnant, and funds have been scarce. Salaries have been frozen for the last two years. After the transition, Kaji will become president, Kimberling will become provost and chief academic officer and Philipp will become senior vice president of student engagement.

Philipp declined to discuss details about the college's finances, but said that the institution was dependent on tuition for its operating expenses.

Milt Heinrich, chair of the art department and a long-time faculty member, said that he and his colleagues did not know anything about a possible sale until they were called to a special meeting on Tuesday. "I can say that a number of people I've talked to feel like a cloud has been lifted off their shoulders," he said.

While there was no knowledge of the negotiations to sell, Heinrich said that it has been apparent that the college faced financial strains, so many have been worried about the future. "Our hands have been tied by our limited resources, and this is a chance for us to dream."

Heinrich said that "there are some concerns" on the faculty about becoming for-profit, but that the commitment of the new owners to keep everyone's job and to keep tenure were "very reassuring" and suggested to him that the new owners were different from those feared by many traditional academics. "We've just been getting to know one another over the past few hours, but I've been impressed," he said.

Kimberling said that the decision to keep tenure reflected his belief that "faculty are the lifeblood of institutions" and that to be effective in "blending cultures," a for-profit institution should show respect for "the values of traditional institutions." He said he viewed tenure as "a master's badge" and that there was "nothing incompatible" about tenure in a for-profit environment.

Kaji said that he believed enrollment could be increased through an infusion of funds. He said that the college has spent next to nothing on marketing and has "fantastic outcomes" to boast about in graduation rates, admission to graduate school and so forth. He said he believed that with adequate marketing, more students would come. He said he envisioned the college putting some emphasis on study abroad, but not requiring it.

The outgoing board will become the board of a foundation that will promote Lutheran services for students and run the campus ministry, alumni affairs, and the Danish American Archives that are held at the college.

A Second Lutheran Loss

Dana and Waldorf were both colleges of the Evangelical Lutheran Church in America, which will have 26 member colleges left after the latest sale. Many of the members outside of Minnesota enroll far more non-Lutheran than Lutheran students. At Dana, Roman Catholic students outnumber Lutherans.

Steven C. Bahls, president of Augustana College, a Lutheran college in Illinois, said last night that the news of Dana's sale "disappoints me but doesn't surprise me." He said that the colleges in the group "represent a range of financial strength, some large and strong and some small and struggling." Bahls is past president of the ELCA's College and University Presidents Council.

Bahls said that his college -- which would be considered among those enjoying strong enrollments and finances -- has a similar demographic mix, with more Catholics than Lutherans as students. He said that he does not view it as difficult for a Lutheran college to recruit students of other faiths. Many students today, he said, "are not as interested in denomination as they are in values and faith," and they want to be at colleges that take faith seriously.

Financially, the Lutheran church does not provide much money to its colleges. Augustana, for example, receives only about $15,000 of its $68 million budget from the church. But Bahls said that figure understates the Lutheran contribution. He said that a majority of the funds raised in the college's recently completed capital campaign came from Lutheran donors.

He said he had mixed feelings about the news from Dana. "To the extent one of our sister colleges is being sold to a for-profit corporation, it is like a loss of a member of the family," but he said he would rather see a sale "than for the college to close."

 

 

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