Career Education Corporation: A History of Growth and Innovation in For-Profit Education

The Career Education Corporation (CEC) emerged in the mid-1990s as a significant player in the for-profit education sector. Through strategic acquisitions and a focus on high-demand fields, CEC rapidly expanded its reach across the United States, Canada, and beyond. This article delves into the history of CEC, tracing its origins, growth strategies, key acquisitions, and its impact on career education. Today, the company is known as Perdoceo Education Corp.

The Genesis of CEC: Capitalizing on Consolidation (1994)

Career Education Corporation was founded in January 1994 by John M. Larson with the vision of capitalizing on consolidation opportunities within the fragmented post-secondary education industry. The company's initial strategy centered around acquiring established schools with growth potential and enhancing their profitability. CEC initially focused on institutions offering programs in business studies, visual design, and information technology.

The first acquisition was the Al Collins Graphic Design School in Tempe, Arizona, founded in 1978. In mid-1994, Brooks College of Long Beach, California, was also acquired. In its first year, CEC's revenues reached $7.5 million.

Growth Strategy: Upgrading and Expanding Educational Opportunities

CEC's business strategy involved acquiring promising schools and upgrading them by improving their facilities and adding new course offerings. The company targeted schools offering training in fields with strong and continuing demand for workers, attracting motivated students. A major goal was to improve student retention and graduation rates, and high job placement percentages. CEC emphasized programs that would serve people throughout a lifetime of learning, with degree offerings ranging from associate's to master's levels.

Strategic Acquisitions: Expanding into New Fields (1995-1997)

CEC continued its expansion through strategic acquisitions. In July 1995, the company added Brown Institute of Mendota Heights, Minnesota, and Allentown Business School of Allentown, Pennsylvania. Both institutions offered training in computer technology and visual design. Brown Institute had been founded in 1946, while Allentown Business School's history dated back to 1869.

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In October 1996, CEC ventured into the culinary arts by acquiring the Western Culinary Institute of Portland, Oregon. The restaurant and food service industry was projected to experience a shortage of workers, creating a solid opportunity for growth in culinary education.

The following spring, the School of Computer Technology of Pittsburgh, Pennsylvania, and Fairmont, West Virginia, was acquired for approximately $5 million, with an additional $1.8 million paid to the former owners as part of a noncompetition agreement. The multi-campus Katharine Gibbs Schools, with locations in the middle Atlantic and New England states, was bought in the summer from K-III Communications Corp. The Gibbs Schools, which had been around for 85 years, offered business training. The Academy of Merchandising and Design, with locations in Chicago and Florida, was acquired for $6.5 million plus $2 million in non-compete money.

Initial Public Offering and Further Expansion (1997-1999)

In the fall of 1997, CEC announced plans to issue 2.85 million shares of stock on the NASDAQ exchange to repay debt. The IPO was launched in early 1998, raising more than $45 million for the company. In March, the Southern California School of Culinary Arts in Pasadena, California, was purchased for $1 million. Another cooking school, the Scottsdale Culinary Institute of Scottsdale, Arizona, was acquired in July for $10 million.

At the end of the year, plans were made to acquire the Harrington Institute of Interior Design in Chicago. The $3.5 million deal was finalized in January 1999, bringing CEC's totals to nearly 16,000 students at 21 campuses in 13 states and two Canadian provinces. Revenues stood at $144.2 million, with a net income of $4.3 million, almost 20 times the amount of four years earlier.

In December 1998, the company formed the CEC Educational Foundation to fund scholarships for students enrolled in CEC schools. Much of its funding came from alumni and from firms that routinely recruited CEC graduates. The company also formed a Professional Education Loan program in partnership with the Student Loan Marketing Association (Sallie Mae).

Le Cordon Bleu Partnership: Elevating Culinary Arts Programs (1998)

A significant agreement was reached in late 1998 with Le Cordon Bleu, the renowned French culinary arts school, to offer its first sanctioned programs in the United States through CEC schools. Le Cordon Bleu, founded in Paris in 1895, was known as one of the finest institutions of its type in the world. The Cordon Bleu training program emphasized classic French cooking techniques applicable to any type of cuisine.

The first United States programs would be offered at CEC's Brown Institute campus in Minnesota, where the new Midwest Culinary Academy was set to open in January 1999, and later at other locations.

Continued Growth and Acquisitions (1999-2001)

The company's acquisitions continued in the spring of 1999 when McIntosh College of New Hampshire was bought for $5 million and Briarcliffe College of New York was purchased for $20.6 million. In June, Brooks Institute of Photography of Santa Barbara, California, was bought for $6.6 million.

In August, an agreement to purchase the California Culinary Academy, a publicly traded company, was reached for approximately $22 million. The school, like most acquired by CEC, had a relatively long history. California Culinary, CEC's sixth culinary arts acquisition, was headquartered in San Francisco and operated satellite campuses in Salinas and San Diego.

In December, Washington Business School was purchased for $3 million. CEC would update its programs to offer associate's degrees and add new classes that would complement the school's business-oriented curriculum.

Read also: Career Paths Without a Degree

Early 2000 saw the purchase of the Culinary and Hospitality Institute of Chicago (CHIC) for approximately $5.5 million. CEC committed $10 million to doubling its size. During CHIC's first year in operation as a CEC unit, the school's income more than doubled, increasing from $5 million to $11 million.

CEC's Le Cordon Bleu agreement was expanded during 2000 to include restaurant management training, which would be taught at the Western Culinary Institute in Portland, Oregon, beginning in January 2001. By this time, six of CEC's eight culinary arts schools were offering Le Cordon Bleu-authorized training.

In July 2000, CEC purchased SoftTrain Institute of Toronto, Canada, which offered information technology training, for $500,000. Another small Canadian acquisition followed in the fall when Retter Business College of Ottawa was purchased for $400,000.

Acquisition of American InterContinental University (2000)

In 2000, CEC made a significant acquisition by purchasing EduTrek, the owner and operator of American InterContinental University (AIU). AIU had campuses in Atlanta, Los Angeles, Ft. Lauderdale, Washington, D.C, London, and Dubai, United Arab Emirates, with approximately 4,700 students. AIU offered programs in visual communication and design, business studies, and information technology. The deal involved the exchange of 1.2 million shares of CEC stock as well as assumption of debt, for a total price of approximately $70 million. CEC targeted a mix of people that included recent high school graduates, older students, and international students.

Focus on Student Retention and Job Placement

CEC's focus on raising student retention rates was showing strong results, with an average of 76 percent remaining enrolled year-to-year in 2000. A new program, "Save Our Students" (S.O.S.), was launched in 2001 to further increase this figure. The company's job placement record was one factor that brought its students back, with 94 percent of CEC graduates gainfully employed within six months of graduation. The rate was an even better 98 percent for the culinary arts programs.

Further Expansion and New Campuses (2001)

The year 2001 also saw CEC open a new branch of the Katharine Gibbs Schools in Philadelphia. During the year CEC also opened a new campus of the International Academy of Design and Technology in Orlando, Florida. In August, Texas Culinary Academy was bought for $ 1.1 million, followed in December by the acquisition of the Pennsylvania Culinary Academy of Pittsburgh for $44 million, further solidifying the companyâs offerings in this category.

From Career Education Corporation to Perdoceo Education Corp

After only eight years in business, Career Education Corporation was proving phenomenally successful, its revenues having grown more than 40-fold. The company was also scoring with its customers, boasting high student retention and job placement rates. Today, Career Education Corporation is known as Perdoceo Education Corp. Perdoceo Education Corp is an American for-profit education company that focuses on quality postsecondary education online to a diverse student population, along with campus-based and blended learning programs. The company's important segments include the American InterContinental University, the University of St. Augustine for Health Sciences, and Colorado Technical University. These universities provide undergraduate, graduate, and doctoral degree programs focusing on business, technology, management, and social services, with the majority of the students enrolled in programs offered fully online.

The Broader Context of Career and Technical Education (CTE)

The history of Career Education Corporation is intertwined with the broader evolution of career and technical education (CTE) in the United States. CTE traces its origins to post-Civil War America, with the opening of the St. Louis Manual Training School in 1879. The âSmith-Hughes Act shaped the nature of vocational education for about fifty years by providing states with federal funds to create training programs focused on agriculture and various trade and industrial skill sets.

Today, CTE is an increasingly viable pathway to success, driven by changes in the economy and questions raised about the value of college education. CTE can motivate students to attend school more frequently.

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