Dana for-profit under new owners

Dana College has been sold to a group of outside investors, a move believed to make the 125-year-old school in Blair the first traditional nonprofit college in Nebraska to take the plunge into for-profit education.

As news of the historic sale spread Wednesday to the school’s 500 students, its faculty and its thousands of Omaha-area alumni, many wondered: What does this mean for Dana?

The CEO of the corporation that bought the college said everyone will be pleasantly surprised. Raj Kaji said he is committed to keeping Dana’s mission, faculty and campus virtually intact as the new management aggressively markets the school to try to double its enrollment.

“In 20 or 30 years, I will be able to say I helped move a college forward, save jobs and ensure consistent outcomes for students,” Kaji said. “Those are things I’ll be very, very proud of.”

Those promises pleased Marshall Hill, director of Nebraska’s Coordinating Commission for Postsecondary Education, but he remained concerned about the sale. Hill said some for-profit schools aggressively recruit low-income students for the federal Pell Grant money they bring in and then skimp on providing a core college education.

“I would imagine that students would have a lot of questions about this, and those are very reasonable questions,” Hill said.

The school’s sale to a corporation is a first for Nebraska, but it follows a growing national trend of small, struggling liberal arts colleges partnering with private companies to stay afloat.

Waldorf College in north-central Iowa sold its assets last May to an online-only, for-profit university in Alabama. Previously nonprofit schools in Chicago, Cleveland and Santa Fe, N.M., are now partly or wholly owned by corporations.

Dana fits the mold of a small, struggling liberal arts college, according to interviews Wednesday with state and school officials.

The college has run up multimillion-dollar deficits in recent years while trying and failing to boost enrollment. The U.S. Department of Education opened an investigation into the school’s financial well-being last year — putting federal financial aid to students at risk — after Dana became one of about 100 American colleges to flunk a financial responsibility test.

Now, the newly formed Dana Education Corp., headed by Kaji and backed by private equity funds, will pump an unknown amount of money into the school to shore up its finances and aggressively market it inside and outside Nebraska.

The Rev. Kip Tyler, a member of the Dana Board of Regents, said the board voted unanimously to accept the company’s offer after board members were assured that the school’s mission wouldn’t change.

“We were reaching the point where ... this was a necessary step,” said Tyler, the senior pastor at Omaha’s Lutheran Church of the Master.

Dana’s sale comes less than a month after Midland Lutheran College in nearby Fremont made sweeping changes — laying off 15 employees and announcing that it would end some academic majors — to improve its shaky financial position.

But Dana’s board took a different route, approving the sale that marks the end of Dana’s traditional nonprofit, Lutheran-affiliated status. The school opened in 1884, when a group of Danish pioneers founded a seminary that became a preparatory school and eventually a private liberal arts college. Its Lutheran ministry and religious focus will remain, school leaders said.

The purchase sparked several managerial changes and put a handful of jobs in jeopardy, school leaders said.

Kaji will soon become the school’s president. He has previously served as a vice president of a for-profit, online-only university.

Janet Philipp, Dana’s current president, will become senior vice president for student engagement.

The school will close its development office since it can no longer accept charitable contributions. That closure jeopardizes the jobs of five or six employees, Philipp said, although they might be moved to other positions at the college.

A new board of trustees will be formed, with members from inside and outside Nebraska, Kaji said. Dana’s current Board of Regents is composed mostly of local residents and alumni.

Officials of Dana Education Corp. said they had no immediate plans to lay off any other faculty or staff members. They have no desire to turn Dana into a primarily online institution, Kaji said, avoiding a path trod by the University of Phoenix and other successful for-profit colleges.

Nine for-profit, degree-granting colleges operate in Nebraska, including the University of Phoenix, Kaplan University and ITT Technical Institute. But none of them began as a traditional nonprofit school, according to the postsecondary commission.

A Dana professor and a student interviewed Wednesday said they were excited by the sale because it could pull the school out of its financial turmoil.

Milt Heinrich, chairman of Dana’s art department, said faculty have been assured that they will keep their jobs and that tenured faculty will keep their tenure.

Student Mandy Hemphill said the students she has talked to aren’t concerned about the sale.

“From what we can tell,” she said, “things aren’t really going to change for us unless it’s for the better.”

Hill said he will watch with interest to see whether Dana’s new owners can deliver on their promises to keep the school largely intact.

In his experience, many for-profit schools pour much of their revenue back into recruiting and marketing, attempting to grow ever larger. They frequently abandon traditional residential campuses, he said, favoring online distance education that costs less to provide and is easy to export to other states and overseas.

And, though often excellent at student services, for-profit schools rarely put much emphasis on programs such as history or psychology — core liberal arts programs that don’t tend to make money, Hill said.

Any changes the new Dana owners make won’t face much state scrutiny, Hill said. The commission has virtually no oversight of for-profit colleges under current state law.

“I’ve never been a person that thought for-profit institutions were automatically a tool of the devil,” he said. “My sense is the faculty there seem somewhat grateful that the institution wasn’t shutting its doors. I suppose I am, too.”

Contact the writer:

444-1064, matthew.hansen@owh.com

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