The outlook brightens at career colleges as economic pressures spur more workers to seek specialized training

by Francesca Levy

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Fifth in a multipart series on the business of college

The Keller Graduate School of Management isn’t one of the country’s highest-ranked or best-known providers of MBAs, and most students heading for business school haven’t even heard of it. Yet it is united of the largest part-time graduate programs in the country, with roughly 12,000 students enrolled. Keller is a college of DeVry University, a profit-making teach owned, side by side with three other learning institutions, by DeVry (DV), headquartered in Oakbrook Terrace, Ill.

After different years of struggle following the dot-com crash, DeVry—one of the largest publicly held higher education companies in the U.S.—has made a vivid comeback. On July 30, DeVry said it would acquire privately held U.S. Education Corp., which owns three of a piece. health colleges, for $290 million. Devry’s stock has rebounded from the low 30s a year ago to the mid-50s.

While for-profit schools as an industry suffer from a gift by will of recruiting violations and continuing concerns about instruction quality, they account for 7% of post-secondary enrollment, according to a new circulate publicly by JPMorgan analyst Andrew Steinerman. They served 2.8 million students in the 2006-07 tutor year in division and non-degree programs and are challenging community colleges for students who want to make known specific workforce skills. No longer content with novices in computer technology and seekers of entry-level business certificates, the for-profits are now racing to stake claims in such growth industries as health care.

Wall Street has taken notice. During economic downturns, professional training becomes further attractive to students, making publicly traded schooling companies preference DeVry, Strayer Education (STRA), Corinthian Colleges (COCO), the Apollo Group (APOL), ITT Educational Services (ESI) and Cappella Education (CPLA) more appealing to investors. Shares of for-profits slumped during the fall and winter over concerns about the availability of student loans, bound in many cases gain bounced back.

"Given the current economic weakness, we find the education services shares to be a in well qualified season relative place of safety haven with favorable intermediate-term prospects," Steinerman wrote in his July 25 report. "In addition to avoiding various costs of a traditive university (tenured professors, decentralized curriculums, dorms, and large physical libraries), for-profit schools usually are also more nimble at identifying that programs will be profitable and in demand."

Steinerman noted that for-profit colleges are well-positioned to responded to shortages of skilled workers and can produce good operating margins. On the other hand, the drive firmly together of government precept and the outlook for student lending remain wild cards. The high excellence of gasoline, which affects students’ endowment to generate to class, is another threat to enrollments.