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Wednesday, November 18, 2009

U of Phoenix: Flow of Federal Financial Aid to For-Profit School Will Continue

The for-profit University of Phoenix -- the United States' largest university, with an astounding 400,000 students -- will continue to enjoy a massive flow of federal financial aid due to recertification from the U.S. Department of Education until 2012. In the wake of concerns about for-profit school, U Phoenix had been on a month-to-month arrangement with the government, according to an Arizona newspaper article, How much money do the owners of this for-profit school receive from American taxpayers in the form of financial aid: $3.2 billion, according to the article. No wonder that U Phoenix has resources to heavily promote itself on the internet, airwaves, and billboards across the country. In a full-page ad in yesterday's New York Times, the president of Phoenix suggested that critics of the school are driven by "fear of change." According to the president, "We are a different kind of university with a different kind of student and different kind of faculty." The ad does not indicate that Phoenix is a for-profit entity that makes money for shareholders.

Friday, November 13, 2009

For-Profit Education Is A Huge, Growing Business

A good article in a recent Chronicle of Higher Education -- entitled, "For-Profit Colleges, Growing Fast, Say They Are Key to Obama's Degree Goals" -- focuses on the major and growing role that for-profit education is playing in the United States.

The story makes clear that, notwithstanding "skepticism by some consumers and policy makers," this sector of our post-secondary education system will be a major player in the drive to have the United States attain the world's highest-number of college graduates by 2020.

The stats from the Chronicle story illustrate how college degrees increasingly come from for-profit schools that are in the business of selling education (and degrees) to people, sometimes to the detriment of the students themselves who encounter troubles with transferability of credits, heavy debt burdens, and limited job opportunities. As noted by the Chronicle, "Academic rigor at for-profit colleges. . . has been a concern, and a recent government report found that, on average, students who attend proprietary institutions have higher default rates on student loans than students at nonprofit colleges. The report, by the Government Accountability Office, also uncovered instances in which officials at some for-profit colleges helped students pass basic-skills tests or obtain invalid high-school diplomas so they could be eligible for federal aid."

Some of the Chronicle facts demonstrating the growth of for-profit schools in the United States:
  • "For-profit institutions. . . are now awarding degrees at a faster clip than their nonprofit counterparts. Between the 1996-7 and 2006-7 academic years, the number of associate, bachelor's, master's, and doctoral degrees awarded by private, for-profit institutions rose at a faster rate than the number of those degrees conferred by public and private nonprofit colleges, according to the National Center for Education Statistics.
  • "The number of associate degrees conferred by for-profit institutions more than doubled during that 10-year span, to almost 118,000. For public institutions, the number increased by 22 percent, to 567,000, during the same period. At private, nonprofit colleges the number of associate degrees decreased by almost 11 percent, to 44,000. Associate degrees awarded by for-profit institutions made up 16 percent of all associate degrees awarded in 2006-7, up from 10 percent in 1996-7."
  • "The sector's revenue is projected to increase by about 10 percent annually, to $41.7-billion in 2014, according to a study this year by BMO Capital Markets. "

The Chronicle also notes that the biggest for-profit school of them all -- The University of Phoenix -- is "growing at a rapid clip." "In October, the institution announced that it had increased its enrollment by 22 percent over last year, bringing its total number of degree-seeking students to 443,000."

So more people attend The University of Phoenix these days than live in Cleveand, Raleigh or Miami.

Thursday, November 12, 2009

Trade Schools Present Opportunities For Retraining -- And Risks Of Huge Debt Burdens

A recent article in the Sacramento Bee -- -- fairly considers key issues facing adults who are thinking of enrolling in any of the many trade schools promoting themselves in this harsh economy. These trade schools often appear to offer a faster path to a better-paying career than what may be available at community colleges and at colleges and universities. Enrollment at these schools is booming, as workers seek to retrain to compete for scarce jobs. But as the Sac Bee points out, the quality of these schools varies sharply, and many charge tuition substantially greater than what public colleges cost. "At a lot of these schools, the recruiters will emphasize financial aid," one official tells the Bee. "The problem is the aid is loans and students will graduate with a lot of debt." And at least one student knows from experience what the official is talking about: "I thought I was making my life better, and all it did was turn me upside down in debt."

"The Same Tired Mantra": Student Has Second Thoughts About Sales Pitch Regarding Degree Answering "All My Financial Problems"

Prospective students at for-profit schools have long been targets of scripted sales pitches from sales people with official-sounding titles such as "enrollment counselors" and "admissions representatives." These sales reps' job security frequently turn on meeting monthly targets in convincing adults to sign up for expensive degree progams. Unfortunately, these sales people often make misleading representations regarding the degrees students will earn and the jobs graduates will secure. The Cleveland Plain Dealer's consumer affairs writer reports on the experiences of someone who had second thoughts about the hefty debt she would be taking on at Argosy Univeristy for online classes -- and then had difficulty trying to withdraw. The student told the Plain Dealer, "Every time I call [about backing out of the program], they refer me to an admissions officer who gives me the same tired mantra that the degree will be the answer to all my financial problems. Help!" With the Plain Dealer's assistance, the woman succeeded in withdrawing before the start of classes. Read about it:

Wednesday, November 11, 2009

University of Phoenix Sets Aside $80 Million For Whistleblower Settlement

The owner of the biggest for-profit school of them all -- Apollo Group, Inc. and its University of Phoenix -- has reportedly set aside $80 million to settle a pesky whistleblower lawsuit brought by enrollment counselors who contended that the school had violated federal law with practices that gave recruiters improper incentives to enroll students. A great read on this for-profit behemoth's troubled past in the area of enrollment of students can be found here: The organization that prepared this story -- -- is "an independent, non-profit newsroom that produces investigative journalism in the public interest." It's difficult, frankly, to imagine two organizations more opposite one another than ProPublica and the Apollo Group. Kudos to ProPublica for its story on U of Phoenix, and to the whistleblowers and their attorneys who pursued these claims. If you have information about abuses by for-profit schools in the tactics that they will go to enroll students and tap into federal financial aid, we at FPS Watchdog would love to hear about.