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Tears for a For-Profit College's Demise

February 20, 2008

Think of all the ink (or its digital equivalent) that has been spilled in national publications (including this one) over the possible closure of places like Antioch College and the New College of California. Distraught faculty and staff bemoaning lost opportunities for students. Anguished alumni and local residents decrying the potential disappearance of a cherished community asset. And dozens, even hundreds, of faculty and staff members confronted with the loss of their jobs.

Contrast that with the relative silence (here and elsewhere) that greeted last week's announcement that Career Education Corp. planned to "teach out," or slowly close, nine of 11 unprofitable campuses that it had announced in November 2006 that it would try to sell. (The company had previously announced that it would shutter two other troubled campuses.) But as one of our bloggers noted critically, Friday's announcement and most of the coverage of it focused on the decision as a bottom-line call by a for-profit company, after Career Education said it had been unable to find a suitable buyer for the institutions.

But most of the campuses that Career Education plans to sell have much in common with the nonprofit colleges whose potential demise has generated enormous hue and cry from academics elsewhere. Institutions like New Hampshire's McIntosh College and Gibbs College (formerly Katharine Gibbs College), seven of whose campuses Career Education plans to shut, were founded in 1896 and 1911, respectively. They have given a leg up (educationally and professionally) to generations of students, been home to scores of dedicated full-time faculty members with expertise in their fields, and been important institutions in their local areas.

"These campuses had been losing money, and had been losing money for a while. So looking at the financial side of the picture, it's clear that closing them down was a last resort, but the company felt like it had to do something, and sooner rather than later," said Jeffrey M. Silber, an analyst with BMO Capital Markets who studies for-profit higher education. "But putting on my social hat, it's a shame. Some of these schools were sizable, with as many as 1,000 students at various times, and they were significant parts of their communities. It's sad."

Just how sad was clear in a conversation Tuesday with Julia K. Littlefield, a 16-year veteran of the faculty at McIntosh College, in Dover, N.H. Like many instructors at institutions like McIntosh, which was once known as Dover Business College and offers associate degrees in fields such as business management, criminal justice and graphic design, Littlefield joined the college after a career as a lawyer, drawn by the "role it has served, as an open admissions college, educating students who might not be getting into some of the other schools" in the area.... They can come and try to get a college education, and we do an amazing job of turning kids who have maybe self esteem problems or learning issues into high functioning, tax-paying people," she said, adding that she and her colleagues "love this demographic."

As she spoke on the telephone surrounded by other faculty members, Littlefield, who teaches English and legal studies, grew increasingly personal, as well as sorrowful. "I am a retired attorney, was editor of a law review and I could have taught in many other kinds of institutions. I came here because we have the power to really change people. But now I'm being stripped of that possibility. When I was in class today, people were crying, I was crying. This is a family," she said, her voice breaking. "I'm 57 years old. I may look good on paper, but I'm not the most marketable person. It's going to be hard for me to go out on the market, but the market is really hard, and I doubt many of us will get new teaching jobs. I really thought I would retire here."

Factors in the Decision

Lynne Baker, a spokeswoman for Career Education Corp., acknowledged the difficult situation in which employees and students at McIntosh and the other campuses find themselves. She insisted, though, that the company had done everything it could to try to sustain the colleges and is doing its best to take care of their people.

Career Education officials "were working very hard to try to sell" the campuses after concluding, in late 2006, that 13 of the company's 90-plus campuses -- 9 that operate in the Northeast as either Katherine Gibbs School or Gibbs College, two Brooks College campuses in California, Lehigh Valley College, in Pennsylvania, and McIntosh College, in New Hampshire -- had combined to lose $30 million in the first nine months of 2006, and that it planned to sell them.

In addition to losing money -- and perhaps contributing to that fact -- many of the campuses targeted by Career Ed had faced scrutiny from either government regulators or investigative reporters. The Katharine Gibbs colleges, one-time secretarial schools that trained generations of young (mostly) women in the Northeast and have struggled to stay relevant, were among the Career Education institutions featured in a highly critical “60 Minutes” report in 2005. Lehigh Valley came under scrutiny from the Pennsylvania attorney general in 2006. And Brooks College, which the company sold off in 2007, got into serious hot water with officials in California. (McIntosh seemed not to have any major regulatory issues.)

"We were very much working hard to try to sell the colleges. We truly could not come to an agreement that was going to be acceptable to the purchaser and to us in terms of protecting the long- and short-term interests of our students, faculty and staff," Baker said. Friday's decision, which involves phasing out McIntosh, Lehigh Valley and seven Gibbs colleges and transforming two other Gibbs campuses into the company's Sanford-Brown Institutes, "was not made easily," she said.

As for the treatment of students and of professionals like Littlefield, Baker said that the company has sought to protect them throughout the process. At the time the plan to sell the colleges was announced, in November 2006, "we did give faculty and staff 'stay bonuses' to ensure both for them and for our students that we would be continuing to provide the services that students need," she said. Career Education is doing the same thing now, she said, offering bonuses to full-time faculty members who choose to stay with McIntosh and the other institutions until they shut down. And for those employees who are laid off, she said -- as admissions officials already have been, given the decision to take in no new students -- "they will have severance in accordance with the company's severance policies."

Some of those affiliated with McIntosh and other colleges challenge the account of Career Education officials. Trustees of McIntosh told Seacoast Online, the Internet arm of The Portsmouth Herald and several other Southern New Hampshire newspapers, that they had been rebuffed by company officials when they sought to buy McIntosh. (Although the company has owned the college since 1997, the college continues to be overseen by a Board of Trustees, on which Career Education is represented.) "The trustees are all local so we wanted to see if local control or local ownership was a possibility," Paul Flynn, a local school administrator and chairman of the McIntosh Board of Trustees, told the newspaper. "We received very little response on those inquiries. CEC may have felt on occasions that they had parties interested in a group of schools rather than one individual college, but they didn't seem interested in selling us the one school." (Supporters of Gibbs campuses in Boston and elsewhere expressed similar sentiments in The Boston Globe and other newspapers.)

Baker, the Career Education spokeswoman, said in response that "we evaluated every offer we received and we have worked very hard since November 2006 to sell these schools. We certainly would have preferred to sell the schools rather than teach them out."

Several faculty members at McIntosh also say they had not received bonuses to stay in 2006, and they noted that the company's offer to them to stay now was merely two weeks' pay. (Baker responded that the employees were told in 2006 that those who stayed would receive bonuses 90 days after a sale had been completed, and Career Education is now "enriching the stay bonus for those employees who were originally eligible for the bonus, and will be providing all current employees a stay bonus to encourage them to stay with us through the teach-out.") Still, most of them say they have no intention of leaving, given that they have full-time jobs now and many feel as if their prospects on the market are not great.

They express a mix of feelings. Some is frustration, citing the heavy administrative turnover at the college since Career Education took over -- seven presidents in eight years, by several accounts -- and price setting policies that put McIntosh's cost to students far above those of other nearby institutions, and out of reach of many of its hardscrabble students.

But mostly they feel a sense of lost opportunity, for themselves and for students. "Most of us came here even though there was never a tenure track," said Littlefield. "We just wanted to be around this beautiful, sweet, lovely college, and assumed it would be around at least for our lives. Looks like we were wrong."

 

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