Now That We Have Transformed Our Institutions to Compete with the University of Phoenix, It’s on Life Support

In late March, I wrote a post titled “The Meaning of the Failure of the Online For-Profit Universities” It was a response to CNN’s hour-by-hour graphing of a dramatic one-day decline in the stock price of the Apollo Group, which operates the University of Phoenix. The stock price had plummeted on the acknowledgement that the online university’s enrollment had declined by 53.7%, from 460,000 to 213,000 over the previous five years and the announcement that the university was implementing a severe retrenchment plan, closing dozens of “campuses” (student recruitment offices) and laying off hundreds of “staff” (student recruiters) across the country.

In that post, I ultimately posed this series of questions:

1. Are any administrators at our institutions ever going to admit that they were dead wrong about this supposed existential threat to our institutions?

2. Are any administrators ever going to be held accountable for being so incompetent that they did not recognize the business model of the online for-profits for what it has always very clearly been—a sham effort to squeeze as much profit as possible from federal aid to students?

3. Are any administrators ever to be held accountable for so over-responding to this supposed threat that they have made us more like the University of Phoenix than we ever should have become?

4. Are any administrators going to engage in some fresh strategic planning that begins with this simple question: If the online for-profit institutions are not the existential threat that we described them as being, how much of what we have been doing in response to that threat is actually necessary and, furthermore, how much of it has been of any substantive benefit to our institutions?

5. Are any Far Right governors or legislators ever going to admit that this sham provision of higher education was made possible by the perpetuation of an unquestioning ideological belief in the privatization of public services and in the relentless reduction of state support for public education?

6. Is anyone in government, at the federal or state levels, going to step back from an unquestioning acceptance of the assumption that technology can solve any problem and improve any human endeavor?

7. In light of the abject failure of the online for-profits to achieve anything beyond a remarkably uniform disappointment of all expectations, is anyone going to start reconsidering any number of other, subsequently introduced “innovations” touted by the “educational reformers”? What about charter schools, standardized testing, MOOCs, competency-based education, and the de-professionalization of teachers and faculty as a necessary prerequisite for improving teaching?

Is anyone going to step away from the ideological talking points and the billions of dollars of potential corporate profits in the “educational sector” and reassert that education is a public “good”– not in the sense of a commodity but, instead, in the sense of one of the fundamental moral obligations that we must meet as a free and an egalitarian society.

Then, on July 1, Education Dive reported the following in a “News Brief”:

“Amid already shrinking enrollment, the University of Phoenix announced plans to cut most of its associate degree programs, close additional campuses, and institute academic admissions requirements.

“The changes are expected to bring enrollment to about 150,000 students by 2016, down from 460,000 in 2010 and 206,900 this spring.

“Other changes announced this week include reducing the frequency of start times for new students, dropping a proprietary digital course platform in favor of a commercially available one, and creating new certificate programs.”

Of course, when enrollment is dropping precipitously, the only available strategy may be to claim that one is purposefully setting an enrollment target at some considerably lower number. Likewise, if an institution has been exposed for having essentially no admission requirements whatsoever, one does not have to be deeply cynical to wonder whether actually having some sort of ambiguous admission requirements will lead to any significant improvement in the percentage of students completing courses and degrees. And one cannot help but notice that this ostensible increase in standards simply does not gibe with the wholesale elimination of degree programs and the increasing emphasis on certificate programs.

In a “Dive Insight” attached to the “News Brief,” Tara Garcia Mathewson offered the following analysis:

“The changes proposed for the University of Phoenix follow Apollo Education Group’s dismal earnings report for the third quarter. The company announced major losses in earnings per share for investors as well as net income in this quarter compared to the same time last year. The University of Phoenix’s troubles are a combination of the regulatory environment as well as public perception of for-profit schools.

“All of the changes announced by Apollo for Phoenix are meant to increase the profitability of the enterprise. They were discussed in a call with stock analysts, some of whom are already advising investors to sell or stay away from the once massively profitable company’s stocks.”

I find the last sentence of Mathewson’s first paragraph to be rather astonishing. The University of Phoenix’s “troubles” may be the result of the “regulatory environment,” but it is essential to emphasize that the abuses perpetrated by the online for-profits in the absence of sufficient regulatory oversight led to stricter governmental regulation only after those institutions had generated billions in profits and, furthermore, that the millions allocated by those institutions to political lobbying and campaign contributions almost certainly delayed the imposition of needed regulatory oversight of the “industry.”

Likewise, it is essential to emphasize that the changed “public perception of for-profit schools” is the direct result of the abuses perpetrated by those institutions against their students who were conned into paying premium prices for sub-standard educations, against the agencies providing the student aid that consistently accounted for very close to 90% of the institutions’ revenue (not coincidentally, the Federal limit), and against the taxpayers who are ultimately footing the bill for wasted student grants and student loan defaults.

In sum, Mathewson makes it sound as if the online for-profit institutions have been the victim of changing circumstances when the actuality is that those institutions exploited and even engineered a very lax regulatory environment until the scope of their abuses were simply impossible to ignore.

Now, this week, the Daily Beast has run a piece by Samantha Allen titled “Death of a Diploma Mill: University of Phoenix Going Down in Flames?” Two things are very notable about the title. First, relatively few commentators have actually categorized these institutions as “diploma mills.” Although I think that the institutions very much deserve the stigma commonly attached to such a label, in many respects they have been actually worse than “diploma mills” because, in most instances, students have come away from years of “study” at these institutions without even a worthless diploma. Second, the assumption seems to be that these institutions can, like the mythical Phoenix, rise endlessly from their ashes. Although I don’t doubt that the billions of dollars available in privatizing the most profitable aspects of public higher education will continue to attract rapacious schemers posing as “innovators” and “reformers,” at some point either the American public has to wake up to this corporate ravaging of public institutions and the public interest or it has to accept some of the culpability for this ongoing and cynical abuse of the public trust.

Allen’s article does include some truly simply outrageous revelations:

“With this latest investigation [by the Federal Trade Commission], University of Phoenix is under particular scrutiny for recruiting veterans. AP reports that the school’s online program has collected over $488 million in tuition and fees from veterans, not including [my italics] the hundreds of millions in GI Bill money that individual campuses have collected. Over the last several years, the school has come under fire for allegedly soaking up this GI money while leaving veterans strapped with debt. . . .

“A report from the Center for Investigative Reporting(CIR) claims that 24,000 Iraq and Afghanistan war veterans were enrolled in the online program last year. . . .

“The school has also come under scrutiny for its enrollment of veterans in the past. Last July, the state of California asked the University of Phoenix to halt veteran enrollment in seven of its programs to prevent violations of the Veterans Affairs 85/15 rule, which requires that programs do not enroll more than 85 percent veterans. The rule is intended to prevent schools from exploiting federal aid for veterans.”

Over the last several years, there has been much outrage over the problems with the medical care provided VA hospitals. In contrast, this very deliberate, systematic, and extensive exploitation of veterans’ educational benefits has never been the lead story or a persistently pursued story in any major media—print, broadcast, or digital.

Part of the reason for the scant attention to these issues is that many more legislators than not, on both sides of the aisle, have taken contributions from these institutions.

In addition, the same people who are asserting that privatization is the remedy to the problems in the VA hospital system certainly don’t want to bring public attention to such a glaring illustration of the unmitigated bankruptcy of their ideological assumptions.

Lastly, there is such a pervasive belief and political investment in technological solutions to all problems and technological alternatives to all conventional systems that it is more expedient to move on to the next “innovation” or “reform” than to question the basic efficacy of—never mind the need for– continual “innovation” and “reform.”

Which brings us back to the questions that I have raised at the beginning of this post and had raised in that previous post. If we don’t begin to demand answers to those questions, we will be complicit in the distortion and destruction of our institutions in the service of a mindset that, at its core, disdains the fundamental principles upon which those institutions have been developed.


The full text of Samantha Allen’s article for the Daily Beast is available at:



11 thoughts on “Now That We Have Transformed Our Institutions to Compete with the University of Phoenix, It’s on Life Support

    • It appears that the author is very disillusioned and rightfully so about today’s hyper-corporatized higher education institutions and their administrators/managers. Yet, he seems disappointingly biased and under informed. U. of Phoenix is not simply an online education institution. It is known for a for profit, distance AND on-campus/-site education institution. I wouldn’t mix up for-profit online education with online teaching method adopted by numerous teachers and institutions, however, regardless of their political leanings. Nowadays, online technology is often used for grade schoolers and will likely stay here, if not the norm. Hence, if ICT-managed teaching and learning is indeed THE problem, then the scope of the problem is bigger and ever growing prevalent. I wouldn’t criticize online or ICT-managed teaching overly and unfairly.

      It’s the professors and the administrators/managers who misuse the technology for profit and offer poor education, unjustifiable grades, and false diplomas, which is in no way the problem of online teaching alone. It has been time and again an issue in higher education. So, please focus on the real issue, not the delivery technology that we invented to fulfill our ever changing needs and desires. WHERE and HOW teaching and learning occur doesn’t seem to be an issue, as it has never been. Once smart people institutionalized, adapted, and commodified higher education out of need and out of fear, they ever craftily created the problems we face today and for a long long time, and that’s the reality. We always solve one immediate problem and create a long-term headache. His questions and points are well taken; yet, I believe the author misses the mark.

      • Just to be clear, I am not saying that online education does not have a role. You seem to be equating my criticism of the online for-profits with a wholesale criticism of online education. What I am saying is the way in which we have adopted online education has been driven by what is now the very clear false assumption that the online for-profits posed an unprecedented threat to our continued existence. Our institutions’ investments in technology and our adoption of online education could have been much more carefully considered and much less disruptive if it had not been driven by this sense of overblown necessity.

  1. You’ve made a variety of excellent points- I could not agree more that the academic business model adopted by the U of P was destined to fail.

    But… I must confess I was a wee bit disappointed that you failed to acknowledge the elephant in the room. The elephant that made the U of P- and many other of these fly-by-night operations possible: the existing academic business model of the traditional four year campuses.

    I think we can all agree that the lion’s share of our major universities became “for profit” institutions beginning in the mid to late 1980s (even though on paper, they are registered not-for-profits). Take a look at the increases in tuition over that period, and compare those increases to inflation and cost of living indexes. Also compare university budgets from that period to now.

    Higher education, across the board, is big, for profit business in the USA. There is no denying this essential truth. So for all the problems you list concerning these online diploma mills, I believe you have skipped over perhaps the most pertinent among them: that the ridiculous and out of control tuition & fee costs have driven many students out of your system and into the diploma-ramas.

    • I would argue that you are somewhat confusing cause and effect. The corporate mindset that made the online for-profit bubble possible also has driven the corporatization of our institutions. As much as anything, the decline in state support for public colleges and universities, promoted by those who would privatize all public services and institutions, accounts for the lion’s share of the increase in tuition. Also, the students recruited by the online for-profits have undoubtedly had all sorts of reasons for enrolling in them, but lower costs is absolutely not one of those reasons. The sticker price and the out-of-pocket costs for students are both higher for the online for-profits than for any other category of institution.

      • Decreases in state support of tuition and fees certainly had an initial impact on the rising cost of education. However most of those impacts occurred in the late 1980s & early 90s. Fact of the matter is, universities have continued to increase tuition by leaps & bounds, often annually, long since states’ support was reduced. So I must disagree with your point that these increases we have seen over the past 15 years have anything to do with state tax revenues for the lion’s share of institutions. This argument, I think, is old hat and somewhat tiresome.

  2. Students want this kind of education delivery and the enrollment numbers show it. There’s nothing to say a high-quality education can’t be delivered entirely online through various technologies. Worry over the technology’s role in this is misplaced. Educational quality doesn’t have an obligate relationship with in-person delivery. Students today in fact need flexible education options more than ever in order to complete their degrees and make use of the sunk cost that got them their existing credits, often from a physical campus. It just needs to be regulated, non-profit, and focused on quality.

    • I agree with what your are saying about the popularity of and the need for online education, but as I have written in reply to another comment (see above), I am not criticizing online education per se but, instead, the way in which the exaggeration of the threat posed by the online for-profits has made our institutions’ investments in technology and our adoption of online education much more hasty and much more disruptive than it could and should have been.

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