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Allegations against U of Phoenix persist

A University of Phoenix sign.

Katherine Clark with her boyfriend Daniel Ray and their dog Cadence.

Michele Rambo, 23, of Grand Prairie, Texas.

TEXT OF STORY

Kai Ryssdal: While most businesses are still trying to find their way out of the recession, for-profit higher education is doing quite fine, thanks very much. Enrollments are up 20 percent, profits are up as well. But that doesn't mean there aren't any problems.

The biggest for-profit schools get most of their revenue from federal student loans. The billions of dollars their customers borrow to pay tuition. The University of Phoenix is the biggest for-profit school out there, probably the best known as well.

A few years ago, it paid the government $10 million over accusations about its high-pressure recruiting tactics. Now it's put aside another $80 million to settle a lawsuit about the same thing.

And a joint Marketplace ProPublica investigation shows some for-profit schools are still abusing the system. Sharona Coutts and Amy Scott reported our two-part series. Here's Amy:


AMY SCOTT: You've seen the ads on mass transit, Facebook and TV, promising job retraining, online classes, flexible schedules.

UNIVERSITY OF PHOENIX AD: I was the first in my family to graduate from college. But I won't be the last.

Hundreds of thousands of Americans have been drawn to for-profit colleges like the University of Phoenix.

UNIVERSITY OF PHOENIX AD: And I am a Phoenix.

Phoenix isn't the only school that profits from the stream of federal student aid. But it's the single biggest recipient. Last fiscal year, 86 percent of its revenue came from the federal government. That's more than $3 billion. But who's benefiting from all that money?

MICHELE RAMBO: My name is Michele Rambo, and I live in Grand Prairie, Texas.

Rambo signed up at the University of Phoenix in Dallas a few years ago.

RAMBO: I did tell them that I was pregnant and they were like, oh, well that just solves everything, you know, you qualify for a grant, you're covered. And I'm like, so I don't have to pay anything? And they told me no.

Classes went well. She got good grades. She was almost finished with her associate degree when a school counselor called about moving her on to a bachelor's program.

RAMBO: And one of the questions that she asked me completely stopped the whole conversation. She had asked me, so what kind of loan do you have?

Rambo thought she didn't have a loan. But when she enrolled, she signed what she thought was a form inquiring about federal aid.

Turns out it was an application for loans that'll cost her $18,000 when she graduates.

RAMBO: It was scary. It still is scary. I'm still scared. I still don't even know what I'm going to do yet.

So how could this happen?

It turns out the enrollment counselors at the University of Phoenix get paid in part based on how many students they recruit. The university's negotiating the settlement of a lawsuit that claims employees were pressured to sign people up.

Bill Pepicello is president of the University of Phoenix. He says his school goes out of its way to ensure counselors don't mislead students.

BILL PEPICELLO: We train our financial counselors very carefully to provide an array of options for students, and to try to be as specific as they can as to what the implications of each of those are.

One financial aid expert told us it's not uncommon for students to sign a bunch of paperwork without really understanding the terms of their loans.

Sound familiar?

At a recent hearing, Congressman George Miller of California likened problems in student lending to another recent crisis.

GEORGE MILLER: I'm a little worried that we're developing a process here that looks a lot like sort of subprime student loans. And knowing that these people don't have the capacity to pay it back, knowing that they may not have the ability to benefit from this education, we go ahead and extend them the credit...

What he means by not benefiting, is that many students saddled with debt don't finish their degrees. The for-profit industry says about 60 percent of its students graduate from two-year programs. The University of Phoenix says its rate is less than half that. But whether students drop out or graduate, they still leave school burdened with debt. And it's debt they can't escape.

BARMAK NASSIRIAN: It is very important to understand, student loans are the most collectible obligation in the United States.

Barmak Nassirian is with the American Association of Collegiate Registrars and Admissions Officers.

NASSIRIAN: Students who default on their student loans have their Social Security benefits intercepted, have their tax returns intercepted, have their wages garnished. They are ruined for life.

The Department of Education says more and more students are falling behind on their loans. For-profit schools have a higher default rate than the average.

Harris Miller represents many for-profit schools as CEO of the Career College Association, a lobby group in Washington, D.C. He says defaults are higher at his schools not because they're for-profit, but because they sign up poor people. People who might not otherwise have a shot at college.

HARRIS MILLER: The simple fact is if your institution is willing to accept lower income students, which our institutions are, which community colleges are, which minority serving institutions are, they have higher default rates.

The taxpayer actually makes money from the interest on these loans. But critics of the system say students often lose out. Not only are they deep in debt, they don't always have much to show for it.

I went to see Katherine Clark at her home in Seal Beach, Calif. She signed up for a business management degree at the University of Phoenix. She says the program included courses like "Skills for Lifelong Learning."

KATHERINE CLARK: Like they had worksheets where it was like if you're deserted on an island, and you have a list of things, put them in order of how they would be important to you. And I'm just like are you kidding? What am I ever going to use this for?

Clark didn't qualify for federal student aid. So she paid some of the bill with credit cards. The rest she owes to a private lender, Sallie Mae.

CLARK: In total, I've paid out of my pocket, $3521. And I still owe $600.

Scott: And what did you get in return?

Clark: Absolutely nothing.

The Apollo Group, which owns the University of Phoenix, made just shy of half-a-billion dollars in profit last year. But Barmak Nassirian says no one's keeping a close eye on the quality of the education for-profit schools like Phoenix provide.

NASSIRIAN: In too many instances we see keyboarding skills transcribed as Computer Science 101, we have seen working with Microsoft Windows transcribed as a Theoretical Course in Operating Systems, and the like.

Clark was so disappointed she dropped out after a course and a half. University of Phoenix officials say out of more than 420,000 current students, a few anecdotes don't tell the whole story.

But Marketplace and ProPublica have heard other troubling accounts. Tomorrow you'll hear allegations of some abusive tactics for signing students up.

With Sharona Coutts of ProPublica, I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

Katherine Clark with her boyfriend Daniel Ray and their dog Cadence.

Michele Rambo, 23, of Grand Prairie, Texas.

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"Let's ask, is the quality of education from Phoenix any better or worse than from the so called better colleges and universities such as (Yale, Harvard, Uof M, etc...) which our executives from the banking community, or maybe the auto industry are from? Wow, Phoenix looks like a bargain from this prospective."

Then we need to ask if Harvard, Yale and the like teaching business ethics. These same exectutives have engaged in unethical, illigal, and downright nasty business practices. Is this what they teach at Harvard, Yale, and the like?

It saddens me that there are individuals who will support amoral behavior by these corporate executives. Education is the true victim. It is being violated by antisocial corporate henchmen who are making their dreams of domination come true at the expense of others. Stop defending them or maybe those in defense of this corporation are benefiting form it. No it is not a for-profit issue only. Higher education institutions across the board are pimping those who seek higher education. Retention, retention, retention is the name of the game in order to what...keep money flowing. Individuals will do whatever it takes in order to keep bodies matriculating.

When you take out a Stafford Loan (more commonly referred to as a student loan) at any school you have to sign a MPN (master promissory note) with a lender of your choice. The MPN is a contractual agreement between the student and lender that speaks to the repayment of funds to the lender. You are contacted by the lender, usually by mail, and given a copy of your loan documents. All of these students that claim they did not know that a Stafford Loan had to be paid back are stupid or liars. Take your pick! Wise up and finish your education. YOU NEED IT!

I was saddened to hear the biased broadcast against University of Phoenix. I have been affiliated with UOPX for many years and have observed outstanding enrollment, academic, and finance counselors, in addition to academic affairs staff and faculty, try their best to assist people earn an education. Not everyone has the opportunity to attend a university in a traditional way. Traditional universities often require full time status and can be unforgiving to busy schedules, the need to work, childcare needs, or long distance commutes to campus. UOPX has provided another option to assist those who have non-traditional needs.

Unfortunately, even with increased options for education, some people may not have the motivation, attitude, or ability to complete a degree in whatever university they choose. People who are not motivated may give up. People who have a poor attitude may blame the university for their financial problems, for failing courses, for not being in class the required amount of time, and for blaming faculty who give them the grade they earn. UOPX campuses in Milwaukee/Fox Valley offer free (yes, free) tutoring and lab services during the week. Many students who are motivated and value their learning attend these sessions regularly when needed (or call in if they live away from campus).

Personally, I have worked in education for over 30 years. I have a traditional Bachelor’s and Master’s degree from a Wisconsin state school. I had little or no assistance with scheduling courses from that institution, and the finance department personnel were not always personable, even though my payments were always timely. However, my education at that institution was solid because I worked hard to achieve well and took responsibility for my commitments. My doctoral degree is from UOPX. It was a rigorous program, and I wanted it to be rigorous. I found the education from UOPX to be equal to the quality of my previous degrees, and in some cases the quality was greater. My UOPX academic counselor was considerably helpful and encouraging, my finance counselor sent reminder notes regularly for payment as I had requested, and my instructors were organized and knowledgeable. The overall communication from the UOPX SAS program was superb, especially during the dissertation process. I always felt the support was there if I needed it.

I am a Phoenix. I was a Phoenix over 10 years ago when I saw a wonderful online option of education become available for those who could not attend a traditional school. I was a Phoenix when I joyously accepted a position as a faculty member. I was a Phoenix when I was hired as an Academic Affairs leader with UOPX. I was a Phoenix as I crossed the stage to receive my degree as a Doctor of Educational Leadership. And I am a Phoenix still because I believe that UOPX's educational philosophy is dedicated to assisting all people who want a degree and are willing to put through the effort to get that degree, no matter their economic or cultural situation.

I have been a loyal listener to NPR and WPR for many years. The programming is normally very enriching with excellent research. I encourage NPR to revisit the lack of professional reporting regarding UOPX and provide a program that highlights the truth about online, for-profit education (UOPX) as a serious analysis, synthesis, and evaluation of pros and cons.

I read this with interest-I am a 47yr old woman, with 3 grown kids - one at Berkley, getting a law degree, one finishing up at Wayland Baptist Univ (both at school and ONLINE classes) and one just starting her college career...My interest in this article stems from the fact that I am considering going back to school myself, after a many-year hiatus for motherhood/working full time reasons. Not only is Univ of Phoenix out there peddling their wares, but just watch daytime tv and notice all the ads for college out there---there are many, many, many schools that peddle their academics in a variety of job skills, and they all offer financial aid options. Yes this article targets Univ of Phoenix; but, the MAIN intent of this article is to caution everyone out there who is considering an online education to READ THE FINE PRINT! Nothing in this country is Free --- and anyone who thinks any kind of higher education doesn't come with a price better wise up fast and realize that if they do go onto to obtain a higher education, they have to PAY in CASH for it, eventually....just like everything else in this world requires money.

Listen, if UoP has predatory student loan practices, then nail them for it! I have absolutely NO problem with correcting a flawed or immoral practice in any organization. My problem is with the allegations that a UoP education is worthless, which is what many have claimed. It's wrong. I know, I graduated there. I'm NOT worthless. Is it really logical to take the word of someone who gets mad about the money they spent and then turns around and makes claims about the quality of the education? What does that say about them? They CHOSE to enroll. Nobody twisted their arm. If it was so pitiful, then why not drop out immediately? I went to a state university and saw exactly the same losers there. I was in a biology class and 3 black chicks stormed the professor and said the class was impossibly hard. He changed the entire rest of the semester to be OPEN BOOK...including the tests and homework. That same university has one of the top rated business schools in the nation. Another lady brought her little kid to class with her every night. He sat in the floor next to her desk and distracted everyone. Nobody ever said sh*t to her about it. How's that for quality education? So quit throwing stones at Uop just because you are in debt with student loans. There's a lot of innocent students out here that you are hurting. If you want to complain about the people doing the enrollment, then do that. I don't give a crap about that.

I have taught online for the University of Phoenix for a year now. What troubles me about this story is the innuendo. There is a quotation from Nassirian at the very end of the story. It is prefaced by the phrase "for profit schools like Phoenix." The University of Phoenix is the only named institution, yet Nassirian's accusation that keyboarding is being called Computer Science is never proven to be a practice in which the University of Phoenix is engaging. If this story were reporting in a more responsible manner, it would not link the University of Phoenix's name with such practices unless they were proven to have taken place with specific information. Which for profit institution is offering keyboarding and calling it Computer Science? I certainly can't tell by listening to this report.

The University of Phoenix offers extraordinary resources to its online students, including writing labs, an extensive library, tutorials, electronic essay reviews, librarian assistance, weekly feedback from instructors, active discussions with classmates, and nicely written syllabi. And that's just one portion of the program: the entry-level Communications classes. Students and instructors work hard.

Debby Yee, you wouldn't happen to be a lobbyist for University of Phoenix? I noticed that you are conspicuously based in Arizona.

Giving a class in basic Windows and calling it "Computer Science" is criminal. There is a real dilemma in this country regarding those things that make society better: education and healthcare. We are the only industrialized nation that allows its citizens to go into extreme debt, and eventually bankruptcy, from both. Of course, unfortunately, the student loans that U of P allows its hapless student body to incur cannot be discharged in bankruptcy, so those "poor minorities" will be entangled in that cord for the rest of their lives. Isn't capitalism great?

As of yesterday I have graduated from University of Phoenix. I had a few issues with the cost of eductional items; for example, a required text for my last class was just an earlier edition of a text i had purchased for a previous class. When i contacted my financial advisor to ask her to refund my money for the text (to the government, actually, who holds most of my student loans), she told me there was nothing she could do about it, and that she had encountered the same thing. I tried to push the conversation further, but i was met with a brick wall.
I was also required to take a "Skills for Professional Development" - me, a 27 year old student with nearly 10 years of management experience - which turned out to be a "warm-up" class for those who may have not been to school in some time.
Many of the complaints i have about UoP could be applied to all schools - cost of text, justification for expenses, trouble transferring credits.

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