Comments on $78.5M Settles U. of Phoenix Case

• For profit education
• Posted by feudi pandola , FAO on December 15, 2009 at 9:15am EST

• For those who claim that for profit schools are good for higher education, I urge them to read this story. Does anyone really believe that the University of Phoenix will not recoup these fines and legal fees by charging higher tuition rates? Add to this the extremely low retention rates at Phoenix, and you have a recipe for wasting billions in taxpayer dollars.

  For profits in higher ed are the equivalent of for profits in healthcare. We saw what happened at Tenet Healthcare, and now the same thing is happening in education. There is a fundamental conflict between the profit motive and the mission, and the real losers are students and people who need medical care.

• Take notice would be students of Phoenix
• Posted by Paul Rutter on December 15, 2009 at 10:00am EST

• Pandola's comments are dead on right. The question that remains is how to make this case more well known. As it stands, Phoenix admits no guilt, pays an outrageously high penalty to keep it quiet, and future students-that are strongly likely to default on school loans given existing statistics- will fall prey to payola recruiters.
  Its so sad when there is a plethora of brick and mortar schools offering online programs now.
  There was a time when for-profits filled a void, but that void is empty now.

• Don't pass judgement
• Posted by Dr. G. , Asst. Professor of Business Administration on December 15, 2009 at 11:00am EST

• I think that if the federal government saw true merit in this issue it would have joined the lawsuit as a third party. Instead, a couple of years later it filed a "friend of the court" brief... simply opining that the courts should rule against Phoenix. Not much, if at all, evidentiary support is necessary in doing so. The federal government is the real criminal here... it's their good ole boy policies that allowed this type of behavior. Phoenix, as well as many for-profits and not-for-profits, use the wiggle room to make things happen for their employees. I work for a state institution and even though recruiters are not given "merit" increases, they are paid in other ways... comp time, free travel, dinners, and I cannot count the number of cases of misuse of the University's American Express card... each recruiter is given one with his or her name on it.

  As for retention, Phoenix's true retention rate lies within the average of all IHLs (traditional and nontraditional). Most of Phoenix's 400,000 member student body consists of nontraditional students. A very small percentage of its students are first time college attendants. Many of them transfer into the university with college credit, which immediately takes them out of the DoE's frame for calculation. Most of them are working adults who dropped out of school (for various reasons) on average of 10 years prior. So, if you continue to use the DoE's method of calculating this rate, you're simply wrong. Phoenix has issued 2 annual reports. It's most recent provides a candid look into the university's progress. www.phoenix.edu/about_us/publications/academic-annual-report/2009.html . I commend them for their efforts to be transparent. (I am waiting for this type of accountability to be published at my own institution.)

  For-profit or non, each academic institution has to make money. Universities such as Michigan, have opted out of public appropriation to get away from the private funds cap that looms over its head. By doing this, the university is able to raise as much in private funds as necessary and invest these funds in any way necessary. Isn't this profit making? Tuition is still increasing and competitive salaries are still increasing.

  While many institutions maintain a nonprofit status, they operate with a for-profit structure. So the status isn't the issue... it's public policy.

  Phoenix and other for-profits actually save the taxpayer millions of dollars per year. Even though many students receive pell grants (which does not completely cover tutition at most institutions) most of these working adults are having their education paid for by their employers or are paying out of the pocket.

  So all in all... lets look at the big picture here. Let look at the real economics and the real policies that allowed and will continue to allow this type of behavior.

   

   

• Posted by Greg on December 15, 2009 at 11:45am EST

• Paul wrote: "Its so sad when there is a plethora of brick and mortar schools offering online programs now.
  There was a time when for-profits filled a void, but that void is empty now."

  Paul, Oh really? Name one that is not for profit. now name one that has the same accesptance criteria as the for profits.

  Greg

• ....Pocket Change
• Posted by ...just and Adjunct , Assoc. Director at Northeast Liberal Arts on December 15, 2009 at 12:15pm EST

• ...this settlement is pocket change to the University of Phoenix. It sounds like a bargain to me.

  Make no mistake UOP was the pioneer of online learning and while critics are vocal about their contempt for their business model, behind the scenes they are green with envy and attempting to copy what UOP is doing. The difficulty is: UOP is so innovative they have left every other accredited college or university in the dust.

  Show me a UOP graduate and I will show you a person who understands business better than most and knows how to get the job done.

  I'm sorry if this hurts anyone's feelings...

• I am confused...
• Posted by Dr. G. , Asst. Professor of Business Administration on December 15, 2009 at 12:45pm EST

• I am well educated and have a solid record of publications and presentations under my belt. But I am confused.... How does a "void" become empty?

• Emergency Education
• Posted by Samson Agonistes on December 15, 2009 at 12:45pm EST

• Dr. G writes, "While many institutions maintain a nonprofit status, they operate with a for-profit structure."

  A fundamental difference, however, is the need for big enough profits to keep Wall Street interested. That creates a disturbing dynamic in education at large.

  I can understand the business sector's impatience with public education. And I can understand the lure for non-traditional students. Yet as the "market share" of the for-profits grows, and more on more on the terms of the business class, it creates pressures to narrow and redefine education as something only of value ("measurable") to a limited sector. It means "operating efficiencies" that do away with academic freedom and research, and impose inordinate teaching loads on faculty, so many of whom got into academics for something other than philistinish reasons.

  It further pressures society to go on underfunding education in order to create an emergency (arguably predatory) situation for non-traditional students and marginalized academics. Within a strictly business context it does make (exploitative) sense.

  Within larger context for education, it gives one the creeps. We are less able to teach toward what the world at large will actually need in the coming decades (sustainable technologies, increasingly cooperative democratic skills, people globalization instead of corporate globalization, the economic innovation that supply and demand does not equal markets, etc.) We're forced to teach only what the biggest stockholders want for their perpetual short-term interests.

  Ask ANY for-profit university if it is training people in these new kinds of inquiry-based democratic skills. Then notice how the for-profit sector's increasing market share is forcing the publics to compete more and more on strictly Wall Street's terms.

• joining the lawsuit
• Posted by Don Heller at Penn State U. on December 15, 2009 at 1:00pm EST

• Dr. G. said: "I think that if the federal government saw true merit in this issue it would have joined the lawsuit as a third party." Keep in mind that the decision not to join the suit was made by a Bush administration DOJ and ED, which were very friendly toward and supportive of the proprietary sector. So it was not surprising they did not join the suit.

• Disagree with Emergency Education
• Posted by ...just an Adjunct , Assoc. Director at Northeast Liberal Art on December 15, 2009 at 2:15pm EST

• Any first year business student or history professor with a TIAA-Creff retirement account understands that Wall Street always views investments and profitability over the long-term. Wall Street's view of UOP is no different.

  As a former broker/dealer I can tell you, long term accomplishments require meeting many short term measurable objectives. We can't make the mistake of heaping our collective disdain for Wall Street shenanigans upon UOP and their business model just because they are a highly successful for-profit university. By settling this case, UOP is falling on the sword as a result of the Federal Governments lack of clarity in the application of Safe Harbor rules and compensating Enrollment Counselors. Perhaps Wall Street views this settlement as meeting one of these short term objectives.

  If UOP sold-off every share of stock it owned, took the proceeds and morphed into a traditional university, you would initially have a well run highly profitable enterprise. However, over time with faculty governance it would begin to lose efficiency, transparency and its student centered focus. Sitting in the cafeteria reading poetry isn't research.

  From my experience, faculty centered colleges and universities are sluggish, self indulgent, self absorbed and as innovative as my pencil holder. In contrast, student centered universities like UOP are spry, transparent, magnanimous and highly innovative. This is attractive to Wall Street and to hundreds of thousands of savvy and forward thinking students.

  We could really learn something from UOP.

• To Don Heller
• Posted by Samson Agonistes on December 15, 2009 at 2:15pm EST

• I meant to make a similar point and forgot upon being interrupted. But neither am I so sure an Obama administration would have joined the law suit. Remember, both the Rebublican and Democratic parties are wholly-owned subsidiaries of Big Business.

  Similarly, in ancient Rome the patricians divided themselves into two factions,
  one "conservative"(whatever that means) and the other "liberal." Each faction disagreed over the best way to keep the plebeians in line. But so, together, they ruled.

• Oooook....
• Posted by Dr. G. on December 15, 2009 at 3:45pm EST

• Sam.. I understand what you're saying. However, we must not assume that every for-profit educational venture is based on the gods of Wall Street. Walden University, for instance, is part of Laureate Education... a network that has 45 accredited institutions in North America, Latin America, Europe, and Asia. The company is privately held.... and while Wall Street may have a distant influence, it's there are not stockholders to make decisions. To add, the corporate side does not interfere with the academic side.... per se. I have a close friend who has been teaching at Walden full-time for 30 years and absolutely loves it. It's a student centered institution and Walden takes care of its students (scholarships and fellowships) and faculty (research grants and fonding...etc.

  For-profit (market share) education isn't a bad thing.... It's the governance and public policies that influences the way it's operated.

• To Just an Adjunct
• Posted by Samson Agonistes on December 15, 2009 at 5:30pm EST

• "This is attractive to Wall Street and to hundreds of thousands of savvy and forward thinking students."

  As I say above it depends upon contexts. Students are "savvy" if a recruiter tells them they can earn a degree in shorter time (and lets on like they might not even have to pass General Ed. courses in order to receive a degree, something I find disingenuous in my own for-profit institution.)

  I don't think our educational system even gives students a chance to be forward thinking in another context: that of learning innovative things that by-pass what we think of as "the market" over against a genuine supply and demand economy, and as the right and desireability of ALL workers to have governance. Why should only MBAs enjoy creative, empowering work? Check out the movement toward cooperatives, particularly among Silicon Valley programmers who have dropped out of corporations because only the bosses enjoyed "governance." There are other efficiencies than just the ones that return profits for producing all kinds of addictive, wasteful nonsense. When do students get a chance to question what globalization is doing? The for-profits are leading the rest of education down a dubious path.

• Title IV funds at for profit schools
• Posted by feudi pandola , FAO on December 15, 2009 at 8:15pm EST

• The link is about the resignation of the CEO Univ of Phoenix in 2006. His replacement resigned in 2008. They both drew down millions in stock options with their resignations, and drew enormous salaries during their tenures compared to nearly any CEO or President in a not-for-profit.

  Look it up.

  And you can shrug off the billions in wasted tax dollars on Pell grants for diploma mills like U of P if you wish. And the loan debts that many of these kids end with with no job, or ability to pay. But the Higher Education Act of 1965, as amended, stil permits for profit entities to earn as much as 85% of their revenue from Title IV funds. That money is taxpayer money and we have every right to demand better accountability for our money than a retention rate of just 26% and I don't care what way you measure it, there's an enormous amount of wasted tax dollars out the door with much of it going to very highly paid executives. If our school flunked out kids at that rate, we'd be shut down, and we should be shut down.

  And why do the CEO's keep quitting?

  http://www.redorbit.com/news/technology/355248/apollo_ceo_resigns_companys_stock_has_suffered_lately/index.html

• Reply to Greg
• Posted by Beth on December 15, 2009 at 9:15pm EST

• For Greg....

  Name one that is not for profit.

  National University...

  now name one that has the same accesptance criteria as the for profits.

  National University

• Posted by Greg on December 16, 2009 at 1:00pm EST

• Dear Beth, a rose by any other name.......