EDUCATION FOR PROFIT PUBLICLY TRADED UNIVERSITIES BETTER DEAL FOR SOME STUDENTS.

Byline: Evan Pondel Staff Writer

Latoya Gray knew she had a knack for electronics engineering, but the thought of spending tens of thousands of dollars on a degree from a four-year private school made her feel ill.

So after two years at the University of Southern California, Gray decided to ditch the institution and seek out an equivalent degree at DeVry University, a decades-old for-profit school that has garnered a reputation for its practical approach to electronics.

``I couldn't afford USC any more. And the smaller classes and environment at DeVry was a lot more comfortable to me,'' said Gray, who also cut her tuition in half by attending DeVry.

The question that inevitably surfaces at for-profit, publicly traded schools is whether students are more of a priority than the shareholders who invest in the universities. Analysts who cover the sector say quality usually trumps profits, but there isn't always a clear definition between academics and the desire to bolster the bottom line.

What is known is that for-profit universities are proliferating in Southern California, drawing skepticism among academics while inspiring hope for those who would rather not attend a four-year institution.

``It's true that when you are trying to please two groups, you have to make decisions based on the reliability, quality and long-term views of these groups. And there are abuses that can happen,'' said Kirsten Edwards, a research analyst at ThinkEquity partners in San Francisco. ``But many of these schools have the highest level of accreditation and the perception is changing about the quality they offer.''

It is often assumed that four-year universities are ``regionally accredited,'' considered the highest level of accreditation for an academic setting. Harvard University is regionally accredited and so are the University of Phoenix and DeVry University, two for-profits with several campuses throughout Southern California.

The U.S. Department of Education requires schools to meet stringent requirements to receive such accreditation. That's because regional accreditation is considered a litmus test in terms of credibility when it comes to issuing degrees.

From the perspective of a publicly traded university, regional accreditation may also serve as a marketing tool, enabling the company to entice and capture an audience that would otherwise attend a traditional university.

But executives at Apollo Group, parent company of the University of Phoenix, say the stringent requirements of a regional accreditation puts the onus on them to perform beyond what is expected.

``It is my sincere belief that for-profit schools have additional pressure because of the pure nature that we are for-profit,'' said Matt Johnston, University of Phoenix's campus director in Southern California.

Heightening that pressure is greater scrutiny of for-profits' recruiting tactics. All universities recruit to enhance student populations, whether diversity or stronger academic reputations are the ultimate agenda. But recruiting draws pause at times when regulators perceive it simply as a means to bring in more tuition.

Two years ago, the U.S. Department of Education issued a report that stated the University of Phoenix violated the Higher Education Act, which prohibits paying recruiters based on the numbers of students they enroll, according to The Chronicle of Higher Education. The university eventually paid the department $9.8 million to settle the allegations.

Other for-profits have also come under fire for their business models. ITT Tech, Career Education and Corinthian Colleges are all for-profits that have endured some form of scrutiny by either federal or state regulators.

And yet amid all of the scrutiny surrounding these institutions, students still choose to attend these schools. The reason: For-profits are perceived to offer a no-frills atmosphere that enables students to work hard and get their degrees sooner.

Meet Matthew Hanke, 22, who is attending DeVry University in Canoga Park. His ebullient personality and ambition are reminiscent of a student at the most prestigious of universities. And his ability to design Web sites and make sense of complicated techno-jargon are characteristics he's hoping will help him land a job with the Federal Bureau of Investigation.

``I choose DeVry so I can get there faster,'' said Hanke, who's on the brink of graduating. He also admits that DeVry is a bit pricey when compared with state schools (several thousand dollars more a semester), but at the rate he plans to finish his degree, he figures he'll make up the cost of tuition by entering the work force sooner than his rivals at four-year universities.

``It's worth it to me. I've loved my experience here ... The faculty and the student-to-teacher ratios are great,'' he said.

DeVry boasts about 8,000 students in California and about 53,000 nationally, with plans to open a new campus in Colton, Calif.

Incidentally, just as Hanke has enjoyed his time at DeVry, so have those who have invested in shares of the Oakbrook Terrace, Ill.-based company in the last year and a half. Since October 2004, the value of DeVry shares has jumped more than 50 percent on the New York Stock Exchange.

Conversely, shares of Apollo Group have declined more than 20 percent in the past two years. ThinkEquity analyst Kirsten Edwards said the Phoenix, Ariz.-based company is encountering some difficulty drawing more students from online advertising campaigns. But Matthew Litfin, analyst with William Blair & Co., is of a different philosophy. Instead, Litfin said, the stock has had a tough go because of inflated expectations and growth rates.

``At one point, UOP was growing at 25 percent a year, but that has since slowed to about 5 percent,'' said Litfin, who also noted the company is focusing more of its attention on its relatively new Western International University. The company is also opening a Long Beach campus in the next several months.

Tuition at the University of Phoenix generally ranges between $17,000 and $18,000 for an undergraduate degree. The school currently boasts about 200,000 students across the country.

Despite the lackluster performance of Apollo shares, students at University of Phoenix seem relatively happy. During a recent visit to University of Phoenix in Woodland Hills, students Shanna Fichera and Roya Madi were gushing about their new communications class.

``The hours are great,'' said Madi, 28, who works for a pharmaceutical company during the day.

Fichera, 19, echoed a similar sentiment, adding that the classes also ``feel much easier than high school.''

Evan Pondel, [phone]

evan.pondel(at)dailynews.com

CAPTION(S):

3 photos

Photo:

(1 -- color) DeVry University seniors Latoya Gray, 25, of Canoga Park, and William Martinez, 30, of Northridge, do a final inspection on their senior project, an emergency communications device.

(2 -- color) DeVry computer information systems students work in the electronics lab for a networking class. For-profit schools are a perfect fit for some students looking to graduate earlier with the same skills.

(3) DeVry University's Valley campus is on Roscoe Boulevard. It's one of a growing number of for-profit schools that are generally cheaper in the long run to attend than public universities.

Tina Burch/Staff Photographer