Feature, For-Profit, University & College - Written by Paul Glader on Thursday, June 16, 2011 4:21 - 2 Comments
For-profit college guru Michael Clifford’s latest project: Victory University
Part 1 of 2
By Paul Glader @paulglader (Photo: Aaron Lindberg)
NEW YORK — Michael Clifford never attended college, himself. But as CEO of Significant Federation in Solana Beach, Calif., he’s been a major deal-maker and investor in for-profit colleges and online education. He’s a trumpet player turned former cocaine user turned Judeo Christian turned entrepreneur. In recent years, he’s helped orchestrate six institutions including Bridgepoint Education Inc., L.A. College International., Grand Canyon Education Inc., Patten University, Chancellor University, and Victory University.
That industry faces new regulations from the Department of Education designed to improve quality. Clifford, 57, spoke with WiredAcademic editor Paul Glader to talk about the new regulations, his new for-profit colleges and the way forward for the industry (Interview edited for brevity):
WA – Remind us of the projects currently on your plate?
MC – Most recently, we (as a public trust) financially sponsored and acquired Victory University in Memphis. Mike Huckabee is the chancellor. It is a 70-year-old Judeo Christian college dedicated to producing the best inner city teachers on the planet. It was called Crichton. We changed the name to Victory because we like it better. It’s an African American college. Its claim to fame was turning out the best inner city teachers. Have you seen Waiting for Superman”? We’re hoping to be the answer to the inner city teachers issues.”
WA – What’s the size and scope of this school and who else is involved with it?
MC – It will hold up to 2,000. We probably have about 800 right now. We’re launching our online operations next week (June, 2011). We’ll probably start with 70 or 80 online students. I did this one with my own money. I’m not having to deal with private equity or venture capital people. They bring a different dynamic and set of problems to the table. There is so much pressure to grow and to perform. We are taking our time and focusing on quality, not growth.
WA – How did the acquisition work? What was the purchase price?
MC – It’s a very convoluted deal. It was a non-for-profit to for-profit conversion. We have about $16 million invested… We managed it for a year and a half as a non-for-profit starting in December, 2009. The previous management had no accreditation problems or issues at all. They had a large donor who donated millions per year and he had a situation where he no longer could donate anymore. The board was very smart. They had their act together.
WA – What’s Mike Huckabee’s involvement?
MC – We formed a foundation to provide scholarships. Mike is chancellor of the Victory University Foundation… Mike is helping us with policy, direction. He’s given a lot of vision. He’s getting more and more involved. We didn’t know whether he was running for president or not. I would have loved having a presidential candidate as chancellor of Victory.
WA – The regulation picture in Washington has become the key issue for the industry, right? What’s your view on the new rules taking effect?
MC – I am not concerned about it for our institutions. I think it’s possibly unconstitutional to say these rules apply to for-profit rather than not-for-profit. I think that will get challenged on a constitutional basis. I think it’s unfair. Another school that I sponsored (acquired with a public trust) – United States University – is a recently accredited Hispanic-oriented college in California. Both schools are well-positioned. I like the new regulations. I think it will get rid of some of the abusive players in our industry.
WA – What do you mean the rules are not constitutional?
MC – They should apply to the University of Texas the same way they apply to Apollo. It’s just not fair. A lot of it is a fact that for profits are not state subsidized. Adult learners also have a far different lifestyle than a 22-year-old going to school. A lot of the numbers coming out of the Department of Education were inaccurate and have since been challenged. The overall concepts of the new regulations are good. I like them. I have no idea how they will enforce them. I think it’s going to hurt some of the companies big time.
WA – What are the chances of the rules changing?
MC – I think they’re going to be greatly watered down. We thought they’d be put into effect last December.
WA – Assuming the rules don’t change, what will you and the other leaders in the industry do about the new regulatory environment?
MC – I felt, four years ago, a lot of these rules were going to happen. I felt a lot of the metrics and models would change. We started trying to find the right kinds of partnerships with boards of directors and schools that would fit with the regulatory environment. We have not had to make any changes because we set them up from the beginning.
WA – How is that different from other for-profit colleges and online universities?
MC – The private equity world demands performance standards that puts an enormous amount of pressure on these schools for growth…There’s pressure on these guys. The stocks are really flat right now because of that. They are all down 30 to 40%. I believe the Department of Education does not like private equity firms buying and flipping schools. I have no intentions of ever selling my schools. I’m entering into long-term relationships with my senior management teams.
WA – What about the other schools you helped found but are not as active managing or sponsoring now – Grand Canyon and Bridgepoint?
MC – I think Grand Canyon and Bridgepoint are way ahead of the pack of these publicly traded companies. They can adapt faster. They have very, very great management. I think they are way ahead of the pack… We’re very focused on not enrolling everybody but on enrolling the right students for the right programs and getting them through graduation.
WA – How do you manage your time with all your projects?
MC – I spend my time 1/3 on business, 1/3 on helping my family members be successful and 1/3 on ministry/charitable work. I set some really big goals on the business side. In the future, I’m going to spend much more of my time on perfecting Judeo Christian education. That’s really my passion and utilizing technology on a global basis. On our website, you’ll find the four gospels of education. I’ve really stuck to those four principles. I’d like to take Judeo Christian education to the next level. I think it’s global, international and it’s driven by super high quality faculty and very advanced technology. Victory will be the platform for the Judeo Christian school.
WA – How will you do that?
MC – I think what the leadership at Victory has learned over 70 years from inner city Memphis is very transportable to inner cities of India, Brazil, Africa. The rest of the world is an inner city. There is so much poverty and pain. Education, Judeo Christian education, in my opinion is a key to world peace and ending poverty. It unlocks so many keys for people. With the power of the Internet, we can now distribute it all over the world.
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