Latest U.S. Export: Education for the Masses

It’s perhaps the ultimate cultural export, a made-in-the-USA product with the potential to shape lives.

What’s for sale is the chance to go to college, something Americans enjoy to a greater extent than most other nationalities. Now, because of globalization, freer trade and the ambitions of a few for-profit companies, American-style higher education is coming to emerging markets such as Mexico.

One of the early examples is the Universidad del Valle de Mexico, recently bought by Sylvan Learning Centers, a Baltimore-based provider of education services. Sylvan plans to expand Universidad del Valle to serve the vast potential market created by Mexico’s bumper crop of young adults--and by the lack of space at existing universities.

“There is an explosion of demand versus supply,” said Raph Appadoo, chief executive of Sylvan International Universities.

Eduardo Venegas Becerra, a 20-year-old Valle student, provides a vivid example of the problem facing Mexico’s would-be students.

When Venegas applied to a traditional public Mexican university to study engineering, “there were 100 places open,” he said. “And do you know how many people were taking the [entrance] exam? Eight thousand. Eight thousand.” He shook his head in disgust.

Wall Street analysts are increasingly taking note. “U.S.-style education overseas . . . could become a major export for U.S. companies,” said Greg Capelli of Credit Suisse First Boston’s global services group.

In addition to its Mexico purchase, Sylvan recently acquired controlling interest in a university system in Chile. A handful of other companies, including those that provide education over the Internet and corporate training, are exploring similar markets.

“We have a situation in the world where you have a very large number of high school students that are graduating and don’t have any place to go,” said Jorge Klor de Alva, president and chief executive of Apollo International, part of a group of companies that includes the U.S.-based University of Phoenix. Apollo is in the process of setting up a for-profit university system in Brazil and is working out deals in Argentina and Chile, Klor de Alva said.

Apollo also expects to announce a project in Mexico soon and probably will have students here by next year, he added.

Mexico provides an especially striking example of the kind of historical trends that are drawing investors’ interest.

Consider that in 1965, only 17% of Mexican adolescents were enrolled in high schools, according to the World Bank. By 1995, the proportion had swelled to 61%. Combine that figure with an enormous baby boom in Mexico during recent decades and you get millions of restless high school graduates.

Population Growth Outpaces Opportunities

Even though there are half a million more students in higher education in Mexico now than 10 years ago, college opportunities haven’t begun to keep pace with population growth, according to Manuel Gil, a professor at the Autonomous Metropolitan University here.

There has been some expansion by private universities. But a lack of public funds and fierce opposition to raising the low cost of tuition have constrained the growth of public higher education.

Furthermore, in Mexico, opportunities for higher education still depend largely on geography: The lack of financial aid and loans makes it difficult for students to go away to college, as their U.S. counterparts commonly do, and colleges tend to be clustered in major urban areas. Young people in far-flung locales are often out of luck.

As a result, only 18% of college-age Mexicans are getting a higher education, scholars say--slightly more than the 16% the World Bank says were enrolled in 1985. That compares with an estimated 60% attendance in the U.S., according to Philip Altbach, a Boston University expert on international higher education.

The U.S. has long offered a wide variety of post-secondary education opportunities, from Ivy League colleges and state universities to technical schools and night classes. The options benefit not just the top tier of high school graduates or proficient exam-takers, as is the case in many countries, but also mediocre students, military personnel, middle-aged professionals seeking a career change, ex-cons trying to turn their lives around, moms returning to school after raising kids--and just about anyone else willing to take on the expense and challenge of enrolling in college.

It is this flexibility and anti-elitism that companies such as Sylvan hope to export.

“As Sylvan started looking at post-secondary education . . . it quickly came to the conclusion that the opportunities outside the U.S. are even bigger,” Appadoo said.

Sylvan took controlling interest in the parent company that owns the 14-campus Universidad del Valle chain in December, investing $50 million in cash.

The university will keep its name and continue to be run by its Mexican management team. It enrolls about 45,000 students and targets aspiring middle- to upper-middle-class students.

Ruben Alonso Ramirez, a 28-year-old former construction worker studying for a bachelor’s degree in telecommunications engineering, is among its students. Alonso is the first person in his family to go to college. His father, a career soldier, never got past junior high.

“I realized I lacked certain things. I knew I needed to go back to school to advance,” said Alonso, who was earning about $80 per week at his construction job. Once he finishes his degree, he expects to earn between $160 and $300 a week.

Such a student would be fairly typical at an American community college, or at Cal State Los Angeles, for that matter. But in Mexico, Alonso is breaking new ground.

Universidad del Valle has been carefully developed to serve Mexico’s demand for college educations. Students pay between $3,000 and $4,000 a year for everything, including materials. It is a lot of money for many families, but it’s still half to a third the cost of traditional, elite private universities in Mexico. Financial aid is available for lower-income students. There are entry requirements, but admission is not nearly as difficult as for many of Mexico’s public university programs, which--though virtually free--are woefully oversubscribed.

Jose Ortega Martinez, chairman and son of one of the founders, said Valle needs to open campuses in underserved areas in order to grow. With Sylvan’s capital, Ortega predicts, in 10 years the university will nearly double to 80,000 students.

But the future of college as a U.S. export hinges on a number of uncertainties. It remains unclear what type of education will sell overseas. Consumers may question the quality of new college programs, particularly those offered over the Internet or those that have no name recognition, scholars say.

And there may be political resistance to U.S. meddling in such a sensitive area as the forming of young minds. “In some sectors, it will be welcomed,” said Rollin Kent, a higher education scholar in the city of Puebla, “and in some, violently repudiated.”

Several Classmates Have Had to Drop Out

Perhaps most uncertain is the number of middle-class people in a nation such as Mexico who will be able to afford private schooling. Venegas, the Valle student, said several classmates have had to drop out.

Klor de Alva, the Apollo executive, said the relatively high costs of a Phoenix-style education mean that his company will aim at the upper tier of the emerging Latin American middle class.

“Let’s say we are going after 5% of the market,” he said. “That is still a pretty handsome market.”

Students at the Universidad del Valle had a mixed but mostly positive response to the sale.

The previous ownership “was 100% Mexican--I felt proud to say I had a made-in-Mexico education,” said Alejandro Franco, 22, who is studying for a career in radio.

However, he and other Valle students say the benefits outweigh any doubts. Valle’s for-profit foreign ownership means that it is less prone to strikes and protests than other Mexican universities, and less tinged by politics. The nation’s largest university, the National Autonomous University of Mexico, reopened a year ago after being shut down for nine months by protests.

Also, at more traditional Mexican universities, “there was this idea that if you had a degree, you had this inheritance,” said Valle marketing student Juan Jose Quijano, 23. “It was the tradition of the elite. You don’t find that here.”

American capital, moreover, will improve the university, Quijano added.

“To be honest,” he said, “I’m a little peeved that the sale happened just as I’m graduating.”