SM: It sounds as though the best way to get into the online school business is to buy a struggling school that already has accreditation. Is that an accurate statement?
MC: Correct. There are only 3,000 regionally accredited schools and most are called Stanford, Harvard, Yale, University of Michigan, etc. It is very rare to find a regionally accredited school. Many of our investor groups want to know what the value of regional accreditation is. If you want to start one from scratch, it takes 10 years, $10 million, and a 50/50 chance of success to become regionally accredited.
SM: What is the significance of regional in regional accreditation? Harvard is regionally accredited but it gets students from all over the world.
MC: The nomenclature is confusing because you have nationally accredited and regionally accredited schools. It is a 100- year-old term, but regionally accredited schools are deemed to be higher quality academic schools. The background is that 100 years ago the government divided the nation into six regions, and they made a regional accrediting body for each of the regions. Most of your major state public and private institutions, such as Arizona State or Stanford, are regionally accredited. Students come from all over the world to attend those schools.
Nationally accredited schools grew out of vocational schools such as ITT. We are now seeing that as market-driven schools are getting larger, they are merging and gaining both accreditations. We are seeing a merger of those accreditations. One important aspect is that you cannot get student loans without being either nationally or regionally accredited.
SM: What are the implications of doing business internationally? If one of the market-driven universities wants to start a program in India or China, what would they have to do?
MC: They have to first get permission from their regional accrediting body. There is a process and procedure for doing so. In laymen’s terms it is like a pilot program where you have to demonstrate to the regional body that you have the financial resources to provide the faculty, buildings and resources to sustain the program.
You also have to get permission from the host country. India just opened its doors to US-based schools to operate with a new license. Before we were not allowed to operate in India without a partnership with an Indian school. Our response out of India for Jack Welch has been overwhelming. We can reach those countries online, but the challenge is that only a few can afford the tuition. The student loan program makes it possible for US students, but those programs do not always exist in other locations.
SM: What else should we talk about?
MC: I found another niche school in Memphis that I just bought called Crichton. I am going to re-brand it. It has 750 students and is 61 years old. It is an evangelical school, and we are going to create a new approach to Christian education with that school. I have the former president of Liberty University, which is probably the biggest and most successful non-profit online university, coming on board.
SM: If I wanted to buy a regionally accredited university it sounds as though I would need to call you!
MC: I don’t think there are any! I am looking for them all the time.