CNBC.com
December 20, 2010

By Rob Reuteman

Schools offering a more career-oriented approach to higher education continue to enjoy double-digit growth, fueled by a sluggish economic recovery, accelerated stimulus spending and a more practical student mindset.

“I didn’t want to take academic classes that wouldn’t get me a job in the long run,” says Nick Guerin, 21, who is studying to be a food service manager in the vocational division of Johnson & Wales University’s Denver campus. “I enjoy that this curriculum is career-oriented,” adds Guerin. “I was always interested in the food industry, and this will give me the background and internships I need to become a restaurant manager or executive chef.”

Call them vocational schools, trade schools or technical schools-it doesn’t much matter. Once considered the poor stepsister to traditional four-year, liberal arts institutions of higher education and a refuge for second-tier students, they’re now at the forefront of preparing students for a 21st century workforce.

Revenue at for-profit technical and trade schools jumped nearly 11 percent over the past 12 months, after posting more than 12 percent growth the year before, according to the Sageworks financial analysis firm. Growth averaged between 6-7 percent in 2007 and 2008.

“The old stigmas attached to vo-tech schools are long gone,” says Steven Roy Goodman, an educational consultant and author of “College Admissions Together: It Takes a Family.”

“I’ve seen tremendous growth in the number of students enrolling in vocational or technical colleges and for-profit institutions that specialize in convenient, practical coursework,” he adds. “The IT guy, the electrician, the people who maintain the 911 system or the electrical grid – they make more money because they have more value to society.”

What’s Driving Growth
The cost and convenience of modern vocational education were significant factors in the decisions of more than 270,000 veterans’ who took advantage of the new Post-9/11 GI Bill in 2009-2010, veterans and college officials said.

Of the 15 institutions enrolling more than 1,000 of those students, seven were for-profit career colleges and five were community colleges. In 2007, nine of the top 15 under the previous Montgomery GI Bill, were for-profits, and three were community colleges.

“A large segment of jobs on America require training and skills, but the acquisition of a formal college degree is not really relevant in most cases,” says Richard K. Vedder, director of the Center for College Affordability and Productivity and professor of economics at Ohio University.

“Look at the job data from the early 1990s until 2008,” adds Vedder. “In that 16-year period, there were 20 million new jobs created, but 12 million were classified by the U.S. Bureau of Labor Statistics as not needing a college degree.”

The Bureau of Labor Statistics now estimates that almost 320,000 waiters and waitresses have college degrees. More than 8,000 of them have postgraduate degrees. More than 80,000 bartenders, and 18,000 parking lot attendants are now college graduates, according to the BLS About 17,000,000 college grads are doing jobs requiring less than the skill levels associated with a bachelor’s degree.

For years, research has underscored the earnings power that results from so-called workforce education.

A study by the Federal Reserve Bank of Chicago focused on students who completed one year of career-oriented coursework at a community college, which offers vocational training much like that of the for-profit schools. The year of classes increased the earnings of men by 14 percent and women by 29 percent, the 2002 study concluded.

Changing Expectations
Over the past 20 years, people have come to demand a closer relationship between education and work, says education consultant Goodman.

“The burden is now on the institution to explain very clearly the specific value in the marketplace of its programs,” he says. “That’s a big change. Twenty years ago, it was enough for an institution to say ‘we have a great program, trust us.’ Now it’s more ‘trust but verify.’ That’s certainly what you expect from technical schools, that they provide an academic program that will be of value to you in your career.”

This new focus is largely because higher education is very expensive. “It’s appropriate to ask if a particular program or degree or certification is going to have a direct applicability to your personal career,” says Goodman.

Ryan Wessels, 26, is a recent graduate of Westwood College, which offers a career-oriented curriculum on 17 campuses in six states. Armed with a degree in Information Systems Security, he now works as a security analyst for a large global manufacturer in Sheboygan, Wisc.

“I attended a liberal arts college for a year as a business major, but it wasn’t the right fit for me,” says Wessel. “The Westwood instructors had a lot of real-world experience that gave a depth of insight into the material they taught. Plus, the flexibility of courses and schedules allowed me to have a full-time job.”

The Woodrow Wilson Rehabilitation Center in Fisherville, Va., offers occupational therapy followed by vocational training for people with disabilities, one of eight such centers in the country. An average 70 percent of Woodrow Wilson grads are employed, says executive director Rick Sizemore.

“We tweak our program offerings in response to the changing needs of employers in Virginia,” says Sizemore. “We work with an advisory committee of industry representatives to make sure what we offer is in synch with industry needs.”

Funding Threats
Two looming changes in the landscape for vocational education may adversely affect the current boom in enrollment, but experts say the trend toward post-secondary workforce education is a permanent one.

First, much of the stimulus spending that has helped many thousands of students attend for-profit colleges through a doubling of Pell Grant money over the past two years will end on December 31. (The stimulus package also earmarked $12 billion to community colleges, but it is spread over a ten-year period.)

Secondly, this past summer the U.S. Senate held hearings about the amount of taxpayer money used to pay tuition at for-profit colleges. New regulations from the Dept. of Education have been issued and more are forthcoming.

Though the regulations are targeted at a different brand of for-profit schools, known for high drop-out and student-loan default rates, they are still likely to impact funding for students.

“If these [vocational] schools are no longer subsidized to the same extent, their true value will come to the fore, their natural market positions will return,” says Vedder of Ohio State. “When this recession ends, there will not be an upsurge of jobs for professional people. There is some element of permanence to this. It’s a long-run economic trend that goes beyond ups and downs in financing.”

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