For-Profit Laureate Education, Formerly Sylvan, Thrives Overseas

Laureate Education, a for-profit college company with $4 billion annual revenue, hired former United States president Bill Clinton in 2010 at its height and is now the largest of its kind by enrollment in the United States, currently owning 75 schools in 30 countries worldwide.

In Clinton’s paid position as the company’s honorary chancellor, he travels to several of Laureate’s campuses, making more than a dozen appearances in countries such as Malaysia, Peru and Spain.

Laureate Education was founded by David Becker who renamed the company from Sylvan Learning Centers after he purchased several schools in Europe and Latin America. The company has thrived by exporting many of the practices that for-profit colleges have adopted in the United States, such as offering career-oriented courses and spending heavily on marketing.

According to a 2012 Laureate bond memorandum, the company spends more than $200 million a year on advertising, including television commercials, online campaigns and billboards.

Laureate buys indebted colleges in developing countries in order to capitalize on demographic trends such as meeting the needs of the growing class of people wanting to attend college. For example in Brazil, where just 17.4 percent of 18-to-24-year-olds attend college, President Dilma Rousseff has increased the number of government-backed student loans sevenfold and for-profit companies such as Laureate have flourished.

Trace Urdan, an analyst at Wells Fargo, states that Laureate has mastered the art of acquiring small, indebted schools and making them bigger and profitable. “The first thing they do is bring in the marketing machine,” Urdan says. “Then over a few years, they turn their attention to the operating side of things and make costs more efficient.”

Mina Kimes and Michael Smith of The Washington Post report that the company, which went private in 2007, is backed by several of the biggest names in finance such as Henry Kravis, George Soros, Steve Cohen and Paul Allen. In a deal worth $3.8 billion brokered by the company’s founder and chief executive David Becker, the investor firms such as Kravis’ KKR saw their investment of $487.5 million increase to $710.8 million by 2010.

The for-profit education firm has drawn heavy criticism; in 2010 the company was one of many for-profit education groups that suffered from crack downs imposed by the Obama administration for recruiting abuses and high student debt in the US. For Laureate in particular it is in Latin America, where two-thirds of the company’s profit derives from and where its greatest criticisms originate.

Critics say Laureate boosts revenue at struggling colleges by turbo charging enrollment, often without a parallel increase in academic investment.

“They have turned education into a commodity that focuses more on profit than knowledge,” says Robson Leite, the Rio state legislator who led a probe on Laureate in Brazil for firing professors .

The company continually bolsters its image with campus appearances of former political leaders such as Condoleeza Rice, Tony Blair and Al Gore. It has also filled several key executive and board positions with several members of former President Clinton’s administration such as Richard Riley, former secretary of education; Joseph Duffey, the former head of the U.S. Information Agency; and Henry Cisneros, who served as Clinton’s secretary of housing and urban development.