DeVry Incorporated History
Founded: 1931 as DeVry Institutes
Sales: $353.5 million (1998)
Stock Exchanges: New York
Ticker Symbol: DV
NAIC: 61141 Business & Secretarial Schools; 61151 Technical & Trade Schools; 611691 Exam Preparation & Tutoring
We adhere to the following values, reflecting the standards of service and conduct to which we have committed ourselves: Continuous Improvement--We seek to continually improve individual and group performance in all aspects of our work. Individual Worth--We believe in the dignity and worth of each individual and strive to treat everyone with fairness and respect. Superior Customer Service--We believe in the importance of each customer and seek to satisfy customer expectations--and to do so in a helpful, caring manner. High Standards of Performance--We believe that superior company performance requires from each of us a commitment to integrity, teamwork, individual responsibility, and doing our personal best.
DeVry Incorporated operates one of the largest and most successful for-profit group of business and technical schools in the country, offering associate's, bachelor's, and post-graduate degrees in subjects ranging from engineering and electronics to accounting and business administration. DeVry Incorporated owns three separate higher-education companies, each of which has several national, and in some cases international, locations. The DeVry Institutes offer associate's and bachelor's degrees with an emphasis on engineering and technology; the Keller Graduate School of Management, to which the Center for Corporate Education (CCE) is connected, offers master's degrees with a focus on business management and accounting; and Becker CPA Review prepares accounting students for the Certified Public Accountant and Certified Management Accountant exams. DeVry holds a unique place in the field of education: it is a publicly traded, for-profit company, and as such treats its primarily older adult student body as not simply students seeking a general education, but as customers seeking particular, career specific services.
Beginnings: Convergence of Keller and DeVry
DeVry Institutes was created in 1931 by Herman DeVry. Originally founded as a mail-order electronics repair school, DeVry later branched out into computers and accounting, and built campuses in the Chicago and Toronto areas. In 1967 Bell & Howell Company, best known perhaps for its role in inventing movie cameras, acquired the school and implemented a fast-paced, nationwide expansion program. Throughout the 1970s Bell & Howell developed a technology-based curriculum which focused on preparing students for careers in the burgeoning engineering and computer industry. By 1983 DeVry had an enrollment of 30,000 students nationwide.
The real success of DeVry Institutes, however, was owed not to Bell & Howell but to two men who met while working for the company in the early 1970s. Dennis Keller, a Princeton and University of Chicago graduate, and Ronald Taylor, who earned degrees from Harvard and Stanford, were working for DeVry in Chicago when they decided in 1973 to form their own post-graduate school of business. After raising just over $150,000 dollars from friends and family, the two entrepreneurs opened a non-accredited day school which offered certificates (not degrees, as the school was not accredited) in business administration. Calling the business the Keller Graduate School of Management, Keller and Taylor at first performed all the work the school required themselves, from moving furniture into a rented school room to teaching and balancing the books. By the end of 1974, the company had a staff of five, fewer than 30 students, and almost no money in the bank. Unless a new track could be found, Keller and Taylor knew they would be bankrupt within the year.
Because the school was unaccredited and ineligible for federal loans many potential students could not afford to enroll, even though Keller and Taylor kept tuition lower than other nonprofit institutions. So, instead of continuing to compete with such schools as a full-time day school with a traditional student body, the company switched its focus and began offering evening classes to working adults. By offering evening classes, the school's students had the option of continuing to concentrate on their careers while at the same time attending classes, a formula which has become increasingly effective to a broad range of students over the past few decades. The new emphasis proved to be quite profitable for the fledgling business: within two years the school was offering M.B.A. certification, and the year after that, in 1977, the Keller Graduate School was fully accredited.
Accreditation was traditionally a contentious issue between the academic establishment and for-profit institutions. According to Leslie Spencer, writing in Forbes magazine, the "educational establishment has long thrown roadblocks in the way of for-profit schools by withholding accreditation--the seal of approval required for a school to receive student loans and grants. Any school seeking to make a profit was automatically denied the seal." Because of the Keller Graduate School's success with its students, however, the company was able to throw over that tradition. Spencer, in the same article, noted that the "Keller Graduate School was the first for-profit school the North Central Association of Colleges & Schools ever accepted for membership."
Being granted accreditation enabled the school to overcome many obstacles: the school's academic reputation automatically and dramatically improved, making competition with other schools more feasible; federal loans became available to the school's students; and, most importantly, the school could offer degrees instead of certificates. By 1987, the Keller Graduate School was a true financial success, grossing $5 million a year with an enrollment of about 1,300 students.
While the Keller Graduate School saw increases in both profits and enrollment in the 1980s, DeVry Institutes was facing just the opposite: after its peak year of enrollment in 1983, the business began losing students as more and more people began looking towards business education, as opposed to technological training, to increase their career opportunities. As a result of this negative turn in DeVry's financial outlook, Bell & Howell, having owned DeVry since 1967, decided to divest its 85 percent stake in the company.
1980s: DeVry and the Keller Grad School Come Together
Keller and Taylor, buoyed by the steady growth of the Keller Graduate School, realized that acquiring the company owned by their former employers presented a unique and somewhat risky opportunity for expansion. Many analysts in the industry questioned why a small but vibrantly successful company like the Keller Graduate School would choose to saddle itself with a business which, despite being many times the size of the Keller Graduate School, was slowing in growth and losing profits. Keller and Taylor, however, saw that if DeVry's curriculum could be changed to meet the needs of the modern computer and technological industry, the two schools conjoined could benefit one another, offering training and educational services to an even broader range of students.
However, Keller and Taylor did not have the financial backing necessary to make such an acquisition. Thus, in 1987, the two men approached Citicorp, and a group of insurers headed up by Massachusetts Mutual Life Insurance Company, and borrowed the necessary funds to purchase the DeVry Institutes. Equity investors, Frontenac Venture Company of Chicago among them, also contributed to the effort, loaning Keller and Taylor over $16 million dollars. By the year's end, Keller and Taylor had purchased both Bell & Howell's 85 percent stake in the school as well as the 15 percent that was publicly owned for about $182 million dollars.
The two businesses, the Keller Graduate School and the DeVry Institutes, were conjoined under DeVry Incorporated, with Keller acting as chairman and CEO and Taylor acting as president and COO. Until its acquisition of DeVry, the Keller Graduate School was a Chicago institution, where five of its six campuses were housed. Suddenly, as leaders of DeVry Incorporated, Keller and Taylor had to contend with a cluster of DeVry campuses sprinkled around the United States and in Canada. Such tremendous, overnight growth offered not only an opportunity for the Keller Graduate School's expansion, but also presented many organizational and bureaucratic challenges. Keller and Taylor soon found that they needed to amend the DeVry Institutes' curriculum. They also had to face a potentially crippling debt.
To attract more students, Keller and Taylor treated the DeVry Institutes in much the same manner as they had handled the Keller Graduate School's needs: they began offering not only engineering and technical training to the Institutes' undergraduates, but added a business curriculum which complemented the post-graduate programs at Keller as well. Recognizing that most students who attended the DeVry Institutes in all likelihood needed to work while in school, Keller and Taylor expanded the hours and availability of DeVry's courses, making it possible for students to attend part-time and during the evening. Another important feature which helped to attract students, and draw them away from more traditional higher-education institutions, was the development of the year-round school year. Offering classes year-round enabled students to complete their programs in a fraction of the time it would otherwise take them, an important factor when considering that the typical DeVry student was attending courses for reasons of practical career advancement.
The curriculum at the DeVry Institutes in the late 1980s and early 1990s branched out to include a wide range of educational services, including courses on electronics engineering technology, computer information systems, telecommunications management, accounting technical management, and business administration.
Most DeVry students were first generation students, coming from low-income households and eligible for both federal and state student loans. To appeal to potential students, DeVry Institutes developed ways in which to make payment plans flexible and less rigid than those at rival institutions, allowing people previously priced out of the higher-education establishment an opportunity to earn degrees.
Keller and Taylor's efforts to turn the DeVry Institutes around worked; by 1992, after only five years of debt, DeVry Incorporated had paid off its creditors and was in the black, claiming a net worth of $1.3 million. It was not only DeVry's increased growth that saved the company, however. In 1991, DeVry Incorporated went public, with an initial public offering of 20 million shares of stock, priced at $1.25 per share. Since then, DeVry's stocks have continued to increase in value, with initial proceeds from the offering being used to pull the company out of debt.
1990s Expansion: Taking Advantage of Educational Trends
By the early 1990s two things became clear to analysts in the educational industry: students were graduating from high school in record numbers, and, of those graduates, more and more individuals were seeking training in higher education which would put them on a fast track to technological or business-oriented careers. DeVry Incorporated was in the right place at the right time, offering undergraduate training in technical fields and graduate programs for business people. Moreover, in doing away with such traditional collegiate frills as secluded, landscaped campuses and sports teams, DeVry managed to keep costs low, further bucking the higher educational trend of skyrocketing tuition.
As DeVry Institutes was shaped in the late 1990s into a school well-equipped for the needs of both the business and technology student, Keller and Taylor continued to refine the Keller Graduate School's curriculum. By 1999, the school was offering masters degrees in business administration, project management, human resource management, telecommunications management, accounting and financial management, as well as information systems management. The goal of having each school complement the other was complete, making Dennis Keller's 1988 prediction that "DeVry will be the brand name for our undergraduate degrees and Keller the brand of our postbaccalaureate degrees" a reality.
DeVry's positive reputation grew from several sources, the most powerful of which was the fact that a DeVry graduate in all likelihood was not going to be left upon graduation with a degree and no job. According to DeVry sources, in the 1990s, "of the more than 44,000 graduates who actively pursued employment or were already employed, more than 93 percent held positions in their chosen field of study within six months of graduation." The company also aggressively advertised its success, sending more than 300 recruiters annually to businesses and high schools across the country.
While tuition was lower at DeVry than at private colleges, many public universities still offered similar degrees for less money. What kept DeVry's enrollment up was the company's promotion of the fact that an individual with a DeVry degree could almost be guaranteed a position in his or her desired area. Taking into consideration DeVry's flexible payment plans and class schedules, DeVry's steadily increasing enrollment figures, almost every year in the 1990s, was not surprising.
The company did, however, have its detractors. Some in the education industry questioned the quality of DeVry's instructors, claiming that because most of them did not have PhD's in their fields that they were less qualified than professors found at more traditional universities. DeVry instructors were also usually hired part-time, in order to keep costs down, and had jobs outside of teaching, making one-on-one student-teacher interaction something of a rarity on DeVry campuses. DeVry responded to this criticism by pointing out that their instructors had the most important quality a DeVry student needed to complete meaningful training: hands-on experience in technological or business fields.
In the mid-1990s DeVry was financially strong enough to consider branching out and in 1996 acquired Becker CPA Review, a company which helped students prepare for accounting certification. With over 150 locations across the United States, the Middle East, Canada and the Pacific Rim, Becker truly represented to DeVry an international expansion. By the late 1990s DeVry could claim 16 campuses for the DeVry Institutes, 31 locations for the Keller Graduate School, and an enrollment of over 42,000 students, making the company one of the most successful and high profile for-profit schools in the nation. At decade's end, DeVry's future looked bright, with plans to open at least one new campus a year, as well as extensive on-line programs being developed to complement more traditional instruction.
Principal Divisions: DeVry Institutes; Keller Graduate School of Management (KGSM); Becker CPA Review.
- Byrne, Harlan S., "Trends Favor Chain of Job-Training Schools," Barron's Investment News & Views, February 8, 1993.
- Hofmeister, Sallie, "A Touch of Class," Venture, January 1988.
- Murphy, Lee H., "DeVry's Classes Go Online: Competition, Convenience Push Internet Offerings," Crain's Chicago Business, November 30, 1998.
- Spencer, Leslie, "Competition? Heaven Forbid," Forbes, January 2, 1995.
- ----, "Good School Story," Forbes, May 27, 1991.
Source: International Directory of Company Histories, Vol. 29. St. James Press, 1999.