Switching Sectors

October 19, 2010

In the tug of war over the future of for-profit higher education, the corporate institutions have been pulling on many fronts to change the minds of skeptics and naysayers, and to show that despite the difference in their tax status, the colleges are not all that different from nonprofit colleges on the issues that matter most to students and the nation.

One way to cement the positive similarities, for-profit colleges and their parent companies are finding, is to hire people with years of nonprofit higher education experience and solid reputations for similar positions at their institutions.

On Monday, Diane Auer Jones, who spent nine months as U.S. assistant secretary for postsecondary education at the end of George W. Bush’s presidency, started a new job as Career Education Corp.’s vice president of external and regulatory affairs. Though for-profit colleges have been vilified by some in nonprofit higher education, Jones said she is not crossing over to the other side, but rather taking on a role at an institution she believes in.

“The story that has been told as of late of the sector is very biased and one-sided,” said Jones, who was Princeton University’s chief lobbyist and a Congressional staffer before she joined the Education Department. “I hope that people who know me know that I would never work for anybody who was a bad actor, and will take my move as a sign that the proprietary sector is not all bad.” Jones studied massage therapy at a for-profit college in Baltimore two decades ago, and her son left a nonprofit college after two years to work as a boat builder and has only found appropriate courses at for-profit colleges.

In a statement, Gary E. McCullough, president and CEO of Career Education, made sure to mention the high points of Jones’s career. “From her Ivy League experiences to working as a massage therapist based on training she received at a career college, Diane appreciates the opportunities education affords at many levels,” he said. “I’m confident she will help open dialog with education and governmental leaders on how career-focused private sector education is critical to our success as a nation.”

Jeffrey M. Silber, a senior analyst at BMO Capital Markets, who follows for-profit colleges, said it was a smart move for Career Education, which owns American InterContinental University, Colorado Technical University and Le Cordon Bleu North America, among other institutions.

“For a while now there has been a trend of hires by for-profit providers in regulatory affairs roles with significant public sector experience -- whether it is working for the Department of Education, an accrediting body or outside counsel,” he said in an e-mail. “Given that these positions have only become more crucial to ensure future growth (or in some cases, survival), it makes sense to hire these type of people who ‘speak the same language’ and know many of the players they need to deal with.” In late September, Career Education hired Walter Pryor, who worked as a principal and general counsel at the Podesta Group, a powerhouse lobbying firm, to be vice president of government affairs.

The hires at for-profit institutions reach beyond the realm of lobbying. Two academic leaders just hired at career colleges have deep roots in nonprofit higher education.

In September, Geri H. Malandra, a former official at the American Council on Education and the University of Texas System, became Kaplan University’s provost. And next month, Larry A. Isaak, the longtime president of the Midwestern Higher Education Compact, is set to assume the presidency of Capella University.

Malandra arrived at Kaplan after a brief stint as an independent consultant, following a year or so spent as ACE’s senior vice president of leadership, membership and policy research. From 2002 to 2008, she was at Texas, where she worked in senior leadership roles including vice chancellor for strategic management and vice chancellor for strategic planning and accountability. During that time, she was a close adviser to Charles Miller, who chaired former Education Secretary Margaret Spellings’s Commission on the Future of Higher Education, and served as a negotiator on a federal rule making panel charged with revising regulations on accreditation.

Malandra said that she had been interested in for-profit colleges since the late-1990s, when she led a continuing education project at the University of Minnesota-Twin Cities that operated as a for-profit division. That experience, plus her interactions with for-profit executives in Washington, “helped me come to see that for-profits are just as passionate about the quality of education, just as passionate about student outcomes, just as passionate about serving our nation” as the best nonprofit colleges are.

Friends in nonprofit higher education, Malandra said, reacted positively to the news of her sector shift. “The president of an elite private college said to me, ‘Well, if people like you go into the private sector, you really are going to be nipping at our heels.’ ”

At Capella, the primarily graduate-student-serving institution based in Minneapolis, Isaak is far from the only academic leader with a career’s worth of nonprofit experience on his resume, said Mike Buttry, Capella’s vice president for corporate communications. The company has “a history of hiring from traditional higher ed,” Buttry said, pointing to Deb Bushway, vice president for academic affairs and provost, who joined Capella after spending close to two decades on the faculty of Metropolitan State University, in Minnesota, and to Michael J. Offerman, the university’s interim president, who was an administrator in the continuing education programs at the Universities of Arizona and Wisconsin before joining the company in 2001. (This paragraph has been edited to correct Buttry's title and the location of Bushway's prior employer.)

Isaak said his decision to go to Capella “really had nothing to do with if this is for-profit or nonprofit” and was instead driven by the university’s focus on adult learners, innovations in delivery and offering a student-centric approach. “What Capella is and where Capella is going is what led me here.”

Since announcing his move in late August, Isaak said he has yet to receive negative feedback about moving to a for-profit college, even as the sector is viewed under a microscope by the Obama administration, Congress and the news media. “Not a one person, even in light of everything that’s going on … expressed to me any thoughts that would have given me any pause or reservations at all,” he said. “The total focus here was on helping Capella to maintain its high standards of quality.”

Isaak’s focus may well be on the institution he’s serving and not on the sector it’s in, but for Offerman, the respect and recognition Isaak built in the nonprofit world is important. “Isaak understands traditional higher education from multiple perspectives and desires to create positive change and innovation in a way that values the best of tradition while testing new ways to deliver, measure and improve higher education,” Offerman said.

Some might read that as for-profit higher education attempting to learn from nonprofit institutions’ strengths; others might take it to mean that Isaak’s involvement lends greater credibility to Capella as it attempts to weather the storm coming from Washington. “I wanted to help lead a great organization like this,” he said. “Whether there is something else to be read into that, that I’m saying something about Capella’s reputation, that’s fine. That’s really what attracted me here.”

Jones, whose job is to lobby on behalf of Career Education and the sector it's a part of, hopes that her reputation will help. “If by hiring me it does help some people open their eyes that the sector is serious about doing it the right way, then great,” she said. “If people look at my credibility and that lets them look at the sector in a new way, then that’s a benefit for the company.”

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