Standing in a prison chow hall, Richard Chavez Jr. outlines his past: violent felon, former gang member, the fourth member of his family to go to prison. Then his future: owner of a mobile counseling youth service that goes where the troubled kids are.

Arching a tattooed eyebrow, Chavez credits an innovative program run out of the Cleveland Correctional Facility, about 50 miles northeast of Houston, with helping him gather the skills to operate a business — from character-building and how to carry himself to writing a business plan and finding financing.

The Prison Entrepreneurship Program (PEP) is based on a philosophy that making inmates such as Chavez business savvy will reduce the likelihood that they will return to prison. It emphasizes reforming behavior while also working on a broader goal of reducing the prison population.

With 1.5 million inmates, the U.S. has the world's largest prison population, and costs are soaring at the federal and state levels.

In Texas, it costs about $18,200 a year for each of the 150,000 inmates in a state prison.

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Lawmakers in Washington are looking at ways to reduce prison costs, including trimming mandatory federal sentences and creating incentive programs for model inmates. PEP tackles the problem from a different perspective: What happens when inmates are released?

Since it began operating in 2004, PEP has graduated more than 1,100 students. Graduates have opened 165 businesses, at least two of which are grossing more than $1 million. Within 90 days of their release, nearly all had found jobs. This year, the program is looking to expand to a prison near Dallas.

But that's not the only way to measure success. PEP's graduates have a recidivism rate of less than 7 percent, compared with 23 percent for the overall prison population in Texas.

Operating on about $2 million from private donations, PEP uses a mix of permanent staff and volunteers, including some Texas business leaders. There is no cost to the state.

Participants are selected from within the Texas state prison system. To be eligible, they must have less than four years to serve and not been convicted of a sex crime. They face a rigorous interview process. If picked, they are transferred to Cleveland.

First, inmates must learn how to get along, and, in some cases, learn how to use a computer. PEP instructors work to break down prison cliques and use exercises such as giving each other "sweet names" to bring inmates together. Chavez is known as "Sweet Sugar." Bert Smith, the program's CEO, is "Chocolate Truffles."

In time, inmates essentially will become full-time business students working 40 hours a week. The course work is sufficiently demanding that, last year, Baylor University's Hankamer School of Business began awarding a certificate of entrepreneurship to graduates.

Inmates are paired with volunteers, who help them develop an idea, determine the right pricing, financing and realistic growth rates. The process culminates with a two-day business plan contest. One is eventually selected the class winner.

PEP volunteers encouraged Chavez to make his own story part of his pitch and helped him determine that youth counseling was a potential growth industry in the Houston area. Making himself mobile, going to wherever the kids need counseling, was Chavez's own tweak. Thus "Off the Streets Youth Counseling" was born.

His story, he thought, could be an asset now. "It's not meant for me to keep," he said. "It's meant for me to tell."

Now Chavez has a business plan. His final proposal seeks about $50,000. He wants to open in 2020, perhaps sooner if he is paroled.

Entrepreneurship programs such as PEP are especially useful because they equip inmates with a wide range of skills, said Lois Davis a senior researcher at the RAND Corporation who has studied prison education programs and recidivism. "It's teaching them not only hard concrete skills on the business side of things, but also soft skills that are important."

On graduation day, Cedric Hornbuckle, who completed the PEP program while finishing a term for drug trafficking, tells the current class, "Business is good. This program gave me discipline I absolutely needed."

His business, Moved by Love Moving, based in Houston, is now transitioning into trucking. It also employs a handful of program graduates.

The graduation ceremony has all the trappings of any school commencement: a valedictorian, class superlatives, award winners. Inmates have traded drab prison jumpsuits for shimmery, royal blue graduation gowns. Family members watch from rows of folding chairs inside a cavernous prison gymnasium.

Smith announces the winner of the business plan contest. Then inmates are called to the stage individually and Smith hands each a diploma.

As Chavez's turn approaches, he shows a mix of excitement and been-there cool. He pumps his fist as he walks across the stage.

For the new graduate, opportunity awaits.

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