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The Ever-Expanding U. of Phoenix

October 28, 2009

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In the world of for-profit higher education, and higher education in general, the University of Phoenix has historically been viewed as the 800-pound gorilla.

As of Tuesday, it may be more like a 1,000-pound gorilla. As Phoenix's parent company, the Apollo Group, reported its fourth quarter and annual earnings Tuesday, it announced that the university's enrollment of degree-seeking students grew to 443,000 as of August 2009, up 22 percent from 362,000 in August 2008. The biggest growth in Phoenix's enrollments, by far, came among students seeking associate degrees, which rose by 37 percent, to 201,200 from 146,500 in 2008.

About two-thirds of the university's new students as of August are female, 27.7 percent are African-American, and about half are 30 or over.

The university attributed the sizable increases to a range of factors, including increased efforts in retaining students, expanded marketing, and the "current economic downturn, as working learners seek to advance their education to improve their job security or reemployment prospects." Many community colleges and several of Phoenix's major peers in for-profit career education, including Kaplan Higher Education (21.9 percent) and Corinthian Colleges, Inc. (24.4 percent), have reported sharp upturns in student enrollments this fall.

But given Phoenix's size and bulk, its increase produces startling numbers that -- depending on how things formally shake out in enrollments this fall -- would make the for-profit university bigger than the entire California State University System, which had 437,000 students in fall 2008 and was expected to limit enrollments this fall.

During a conference call announcing the filing of Apollo's 10-K, its annual report to the Securities and Exchange Commission, company officials sought to emphasize the enrollment growth and its general strength in the market. But they spent much of the call fielding questions about three sentences in the 300-page report.

"During October 2009, we received notification from the Enforcement Division of the Securities and Exchange Commission indicating that they have commenced an informal inquiry into our revenue recognition practices. Based on the information that has been disclosed to us, the scope, duration and outcome of the inquiry cannot be determined at this time. We intend to cooperate fully with the Securities and Exchange Commission in connection with the inquiry."

Apollo officials provided little in the way of additional information about the inquiry, which is likely to focus on how the company accounts for revenue. For-profit colleges must adjust their financial statements to account for financial aid payments they refund to the federal government after students drop out of school.

The company's stock dropped sharply in extended trading after the stock market closed.

Apollo also said that it had taken an $80.5 million charge against its fourth quarter earnings to cover the costs of a possible settlement in a federal whistle blower lawsuit that Apollo is in negotiations to settle.

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Comments on The Ever-Expanding U. of Phoenix

  • Posted by Bevo , Department of Resistance on October 28, 2009 at 10:15am EDT
  • UofP: Turning education into a commodity, one customer at a time.

  • University of Phoenix
  • Posted by feudi pandola , FAO on October 28, 2009 at 11:30am EDT
  • Bevo's comment is right on time. America will rue the day that for profit companies started providing education and health care. The University of Phoenix is the educational version of Tenet Healthcare, and just about as unethical. Hopefully, U of Ph will end up the same way that My Rich Uncle ended.

  • Welcome to the 21st Century
  • Posted by ....Just and Adjunct , The Train Has Left the Station at Northeast liberal Arts on October 28, 2009 at 1:30pm EDT
  • This article in light of the DOE's Report indicating that online learners performed better than classroom learners in key areas tells me one thing: Game Over.

    Whether we want to believe it or not, UOP has ramped-up their quality significantly over the last five years and they do a better job of delivering it than anyone else.

    THIS is why they continue to grow at such an alarming rate. They know their students, they understand their market and they keep their promises.

    We would do well to LEARN from them.

  • Could they be right?
  • Posted by Robert W Tucker , President at InterEd, Inc. on October 28, 2009 at 1:45pm EDT
  • Could Bevo and Feudi be right, even though they offer only cheap quips and appear to have no factual knowledge of UOP?

    Should we remain entrapped in the 19th Century guild system the productivity of which has declined almost 50% since 1950, has virtually no systematic evidence of impact or ROI (preferring to offer anecdotes as if they were evidence), measures student outcomes with instruments the validity of which would not pass an introductory course in measurement science, attempts to make progress with little more than squeaky wheels to guide management decisions, often demonstrates blatant disregard for students, teaches the same way its grand-professors taught while ignoring 50 years of learning sciences, and embraces increases in budgets that outstrip the CPI and GDP by factors of 2 to 3 (for no reason other than uncontrollably growing inefficiencies).

    As someone who does understand UOP and the for-profits in considerable detail, I know exactly the many areas in which they stand to improve. However, where they leave Bevo and Feudi in the dust is: (a) knowing what they are in business to do, (b) doing it, (c) having comprehensive and valid metrics to guide their decisions, (d) enjoying a culture that values execution over temporizing (Bevo and Feudi's schools are still debating the merits of the 1980's assessment movement, getting ready to get ready -- one of these days), and insisting that all facets of their institution be accountable to the whole.

    Does any institution enjoy the high ground necessary to throw childish stones? I think not.

    At the very least, the for-profits are scrutable, accountable, focused on continuous improvement, and enjoy the fruits of organizational direction. Their evolution represents a good start over the 19th Century's wasteful and meandering behemoth that tries to live beyond its time by demeaning any and all departures from the then received view.

  • Free at last! Free at last!
  • Posted by Jonathan on October 28, 2009 at 4:45pm EDT
  • Thank God institutions like the University of Phoenix are stepping up to provide learners undergraduate-level education without having to patronize overpriced rent-seeking indoctrination farms. If I could have gotten my undergrad without wasting time on communist programming and money on close-to-campus housing I would have done it in a heartbeat. I think the practical consequence of this will be to force traditional institutions to jettison departments which don't add value that people are independently willing to pay for and drop their prices, just as Wal-Mart has forced its competitors to offer higher quality products at lower prices.

    The market will slap you until you listen to your customers.

  • Questionable defense
  • Posted by Educational Consultant , Owner at Porter Education Consulting on October 28, 2009 at 6:45pm EDT
  • After reading Mr. Tucker's passionate defense of Phoenix, I just had to google him. Here is what I found: InterEd, Inc. was founded in 1994 by Robert W. Tucker, Ph.D., Senior Vice President for the University of Phoenix.

    I have taken courses from Phoenix, Capella and the UCLA online program. While I have learned much from each of these experiences, I don't know that I would trade my undergraduate 'bricks and mortar' experience.

  • Posted by Jason on October 29, 2009 at 1:15pm EDT
  • Online learning will continue to gain a larger share of the non-traditional student market, and that is a good thing. The lack of a quality education from many colleges and universities is largely due to a lack of competition. Well that and an insular culture that detests change and true diversity. However, kids don't go to college simply to learn or get training for a trade. Online schools will never be able to compete in that regard.

  • Quality at Phoenix, Be one.
  • Posted by Nick , Project Engineer at University of Phoenix on October 30, 2009 at 5:15am EDT
  • I have attended University of Phoenix in San Diego, I must make it clear UOP
    academia is demanding. Instructions are taught on a university level not community college, you have to do your work and earn your credits,and you are caught cheating on your papers you will be sacked. I have completed my Bachelors and Masters and dont think that it is just one or two years if you come in with 10 credits then you will complete 120 units for Bachelors requirements. Be advised University of Phoenix in few years is on its path to Ivy League status, sure it is fighting to do better so what there are people who will always complain, and whine about education, so go get drunk after your exams or get promoted. University of Phoenix is a very good institution and it has made me smart and intelligent and gotton me ahead, I am extremely proud to be a Phoenix.

  • It's Just Different. Not Better or Worse
  • Posted by Netwatcher on October 30, 2009 at 10:00am EDT
  • I'm young (42 to be exact). Went to a large university. Had a great time. Got a good education. Today I happily work in sales for a huge, Fortune 100 company. One of the many things we make is an on-line collaborative communication solution. As times have gotten tougher and budgets have gotten tighter our travel allowance has been dialed down quite a bit. So, many of the in-person training sessions we used to attend are now hosted via the web using our own collaborative solutions.

    Until a few weeks ago I had never participated in an internal training that used our collaborative tools and, candidly, thought that there was no way that I could get as much out of an on-line training session than I could an in-person training session. I was really not looking forward to this 2-hour session but clicked on the link and before I knew it was in a highly interactive session that was very well organized, highly specific to the subject matter and focused in delivery. While these are all attributes of a training session that can be achieved in an in-person training session, here is what could not have been accomplished in a traditional classroom setting:

    1. The training proctor (and the two assistants) had about 80 of us in the "class room" that day from all corners of the country (US that day). Clearly not possible in a traditional classroom setting.
    2. The session was highly interactive for every student and not just the 3 or 4 that will usually raise their hand or get called on in a traditional classroom setting. The proctors would cover a short piece of the subject and then push a quick summary review of that subject along with a checkpoint quiz to which each student would need to respond. At each checkpoint the proctor knew whether the subject matter they just covered was getting absorbed by their students. In a traditional classroom the proctor would have to wait until the next testing cycle had completed before they got that kind of feedback.
    3. The proctors also pushed a few simulations to us during the training. (This was a course on how to use a new, internal, complex, on-line tool we are rolling out). So, once they covered a topic, pushed out a quick quiz to verify content was being absorbed, they then reinforced that new knowledge by running us through a simulation tool that we all had to complete in a certain amount of time before continuing.
    4. At any point in the session we could hit the "raise your hand" button and one of the proctors would open a chat window to provide additional help. Or, you could just ask a general question in the open chat window that anyone could answer or provide feedback to. Including students. In my experience in traditional classroom settings few people are paying attention and even fewer are collaborating and actively participating. The structure of an in-person class is not set up to handle fluid, individual help delivery the way that this on-line session was.
    5. At the end of the session the proctors issued a test and a simulation where they were able to get immediate feedback on how well they delivered their materials and how well the students absorbed that material instead of having to wait for a test cycle to complete that may be as long as 2-4 weeks.

    Now, we were missing some of the more "cultural" aspects of a traditional classroom environment. There was clearly no college like atmosphere during this session. The intangibles of being on a campus with a crowd of your piers, going to (or blowing off) class together, then going back to the appartment, cracking open some pre-party brews...None of that happened after my training session. And, in my opinion, there is something to be said for that "college experience". I had a great time and grew in many social and intangible ways that are difficult to measure.

    But, times are a changing. Kids these days want this type of "on-line" life experience that I never even imagined when I was back at the dorm piecing together my clone x86 DOS machine. And, although I have no experience with any on-line colleges, if they are providing educational experiences like the one my company provided me then I think these "kids" are likely to have a better understanding of the actual subject matter than the same kids that are on a traditional college campus.

    Next technology feat? Virtual frat parties I guess. I won't be surprised when they pull it off.

  • Not Just On-Line
  • Posted by Jack Roman , Project Manager / Geek at Superior Court on October 30, 2009 at 12:15pm EDT
  • Something that I think might be missed by a few people reading this is that UoP is not limited to on-line classes. I finished an MBA from WIU (owned by Apollo Group) and didn't take a single on-line class, by choice. The program required a thesis for completion, which also appealed to me (although unfortunately that requirement is now being dropped).

    Just like at my more traditional undergrad university, careful selection of professors and classes was key to getting the most out each subject offered. But this is true regardless of the method of delivery, on-line or classroom setting.

    Ultimately my concern is that there's a move towards "commoditization of education" which may negatively impact the quality of higher education in general. Still as long as the quality of education meets certain levels I feel that by making higher education available to more people we are building a better and more competitive populace. That's a good thing. The market will most likely reward whichever institutions can fill that need.

  • It's Just Different. Not Better or Worse2
  • Posted by Netwatcher on October 30, 2009 at 2:00pm EDT
  • People in some of these responses are talking about comoditization of education. Why is commoditization given such a negative connotation?

    High end options in a luxury car are introduced at a premium price (think electric windows, on-star, intermittent windshield wipers, etc.). Then, over time, those "luxury features" are commoditized and available to the average individual.

    Isn't that what we want for education? Don't we want it to be a commodity that anyone has affordable access to?

    http://www.youtube.com/user/mwesch#p/u/6/dGCJ46vyR9o

  • Posted by Gerry on October 31, 2009 at 3:15pm EDT
  • What I find humorous is the fact that public universities can separate themselves from U of P because they are "not-for-profit". That is complete bull. Public universities need to show some sort of black ink at the end of the fiscal year or else there is a problem.

    While the education may be different, I find that non-traditional programs like U of P give what is needed without all the liberal fat that you get at a typical university. For the most part, their instructors come from the real world with actual operational experience, not twenty or so years in an academic setting.

  • UoP is the Next Housing Bubble -- Beware!
  • Posted by Concerned Citizen , Program Coordinator at Low-Income Community on January 7, 2010 at 5:43am EST
  • The increase in student enrollment since Fall 2009 needs to be investigated. I work in a subsidized housing community and UoP recruiters are making persistent, relentless contact with individuals whose gross annual income is well below $10K. These families are already getting their housing, food and child care subsidized by the government. The unsubsidized Stafford Loans that UoP pushes on them double and triple their annual income, but are not counted as income by the government agency that subsidizes the housing.

    As an example, one single-mom who fits the demographics that open this article is already $8000 in debt after one semester at UoP, completing just 12 credits in a UoP BA program with a 120 credit requirement. At this rate she will be $80,000 in debt when she completes school. Her current income, through in-home child care, is less than $8000 annually. Why is UoP not educating this student on financial competencies? Truth-telling or responsible education would cut in on UoP's profit. The cost of credit hour is about $350 at our local UoP campus. This woman lives four blocks from a State Technical College where the per credit cost is less than $120. Her entire school costs could be met with a Pell Grant each semester she enrolled as a full-time student. The courses are comparable -- certainly there is more variety in the Technical College curriculum and there is also a direct transfer to state University credit program.

    Some smart journalist needs to follow up on this exploitation of persons living in poverty. Yes, every one of the students I know in this situation will default on these loans. It isn't character, it's mathematics. They should not be "taught" by UoP to expect preposterous outcomes from seeking an online education. The woman I mentioned... she believes that upon receipt of her UoP degree she will be earning 200-250K annually and that she will be supplied with a business to run. Where did she ever get such a fairy tale? The recruiter. When she defaults, just remember: it wasn't her character and lack of education that brought about this result. It was the character of UoP recruiters and the posturing of "education is salvation wrapped in a lottery ticket".