Dana College Sells Itself to For-Profit Investors
Founded in 1884, tiny Dana College's student body consists of just 546 undergraduates.
The college in Blair, Neb., has ties to the Evangelical Lutheran Church and an acceptance rate of 71.2%, according to US News & World Report, which ranked it 45th on its list of the best baccalaureate colleges in the Midwest for 2010. Now, a group of private investors is betting that they can turn Dana into a money machine, doubling its enrollment with aggressive marketing and study-abroad programs.
The new owner of Dana College will be Dana Education Corporation, a group founded by investors including Raj Kaji, a former Walden University administrator, who will become president of the college. According to the press release, "Dana College's mission, accreditation, programs, faculty, campus and facilities will be unchanged ... A short-term goal of DEC is to restore Dana's student population to its previous level of approximately 1,000 students at its residential campus."
The game plan for a newly for-profit college is simple: combine the accreditation the school has with an aggressive advertising campaign (University of Phoenix parent company The Apollo Group spends about 20% of its revenue on marketing) to capture federal financial aid money. Bloomberg recently reported on this phenomenon in the case of ITT Educational Services Inc.'s acquisition of Daniel Webster College.
Whether that plan will work out so well for students is an open question -- The New York Timesrecently took a skeptical look at the for-profit education industry, which is characterized by large post-graduation debt loads, dubious job prospects, and hype-riddled marketing practices.
The real test for Dana College will come in student outcomes. For the 2009-2010 school year, Dana College had tuition and fees of $21,100. 92% of 2008 graduates had borrowed money, with an average debt load of $21,170.
It's a safe bet that all three of those numbers will rise under the company's new profit-driven management.
