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Allegations against U of Phoenix persist
A University of Phoenix sign.
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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.
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"Why don’t we ever hear about average people and their issues why is it we only stand up and take notice when the story centers on a “poor minority� "
I'm not sure how long have been living or what planet you live on, but this "poor minority" is what drives the civilization that you lovingly take part in. It's this poor minority that provides the foundation for our society. So I see that you have no problem spitting on those in which you perceive to be less than you.
Capitalism. Free markets. Free reign. This just opens the door for deceit and history has proved it. I find that many people think that because a company found a loophole in the law that allows them to gain more by legally screwing people over is justifiable. Just because you can do something does not mean that you should. Antisocial people don't think this way. These antisocial corporate criminals are respected for this behavior.
"Did you know the current administration is trying to eliminate the FFELP student loan program?"
Did you know that the corporations that you are defending and protecting are lobbying to shut down the Consumer Financial Protection Agency. Well, I guess you think that every single corporate executive is fair and honest and should not have to abide by any rules. This is not to say that all consumers are fair and honest. This is why there needs to be regulation in order to maintain balance. Consumers are not apart of the process that producs these ambiguous, convoluted, and deceptive financial instruments geared towards what...making money off of people.
Debby Yee, I will do my best to be civil.
You were very long winded in your comment and can be summed up this way. You defend and/or either totally represent the thieves and the crooks who misuse the system we have in place. Capitalism has its place and can be beneficial. You or anyone else can never justify taking advantage of and stealing from people just because you have spent countless hours figuring out how to bypass channels in order to do so. There has to be checks and balances in order to have some semblance of fair play. What is fair is not always equal. I understand that, which is why there has to be regulation that will allow for recourse when unjust practices have taken place. Money is not the demon. Antisocial $53k per hour babies who run these corporations are the demons. They cry and scream about regulation because it does not prevent, but hinders their urge to screw people over and exercise their warrior attitudes. Get a clue and have respect for humanity.
Journalism is dead in this country, it really is! Negative press sells advertising. Follow the money my friends….ask yourself why does this article want me to hate UoP? Why do they want me to feel bad for people who signed their names to countless documents but refuse to take responsibility? Why is making a profit a bad thing in this country? This country was founded on capitalism, right? Why do journalists want to demonize money? This article for all it’s supposed “investigation†is slanted to the left, the far left. Where is the balance? Where are the interviews from hundreds of thousands of students that have graduated from the University of Phoenix? Why don’t we ever hear about average people and their issues why is it we only stand up and take notice when the story centers on a “poor minorityâ€? As though everyone else has to own up to their responsibility but if you are a poor minority you don’t. Am I to believe there is a “Financial Aid fairy†that comes to the minorities and the poor and pays for all their education? Why don’t we as a collective group realize and agree that bad people exist but they come in all shapes, colors & social economic backgrounds and you don’t necessarily to be educated. Let’s teach our children, “trust but verify†or “show meâ€. If we as a collective group just decided to follow the money and ask a couple of questions like what is the agenda of this writer? Why does this reporter want me to believe in him? Who is this group and what makes them the authority on this subject?
What is NPR’s agenda? Do you know NPR main funding is from the federal government? Do you know President Obama and his administration hates private anything, especially if it makes money? Did you know the current administration is trying to eliminate the FFELP student loan program? The FFELP program gives the student a choice in what lender they want to have service their student loan based on their comfort zone. What will happen to the employees that currently work in the private banks, will their jobs be eliminated? If the government gets their way they are going to convert all the FFELP student loans to Direct Loan; no more choice and higher interest rates.
Bottom line, NPR stands for the National Public Radio, partners with PBS, Public Broadcasting Service, i.e. the government, follow the money. Who stands to profit if for “profit schools†get bad press? Did you know that the generous billionaires Herb & Marion Sandler are the funders of ProPublica publications? Did you know Herb and Marion sold their World Savings for $4 million in 1963 and building it into mighty Golden West Financial Corp., one of the largest home mortgage lenders in the country? In 2006, they lost Golden West, which had over $125 billion in assets, to Wachovia for $24 billion. Wachovia, which made the terrible decision to purchase the company’s portfolio of subprime loans, teetered on the edge of bankruptcy when the housing market collapsed. It reported losing $24 billion in the third quarter of 2008 and was ubsequently acquired by Wells Fargo at the end of 2008 for a paltry $12.7 billion. Makes ya go HMmmmmmmm. Did you know early this year, the couple found their way onto Time magazine’s list of 25 People to Blame for the Financial Crisis.†Golden West had been a pioneer in the creation of exotic mortgage products such as the option adjustable-rate mortgages, known as ARMs. (Chumley 2009) Personally, before NPR or ProPublica throws mud I think they better clean up their own house.
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.
For all of those out there like my self that have become victims of U of P's predatory enrollment and financial aid practices; You might be interested in checking out the video I just posted to YouTube that documents all the web stories like this one, that reports the Allegations, The recent SEC investigation, and profiles of all current record profits, the Apollo Group,(parent company of U of P) is making in the stock market. Dedicated to all that have become victims, of this for profit school, and until recently, no one was listening.
Mahalo, Robert
"The student that realizes that they’ve been duped & that the education is sub-par loses; they drop their classes and then owe tons of money to the school & through loans. The student that goes through and receives their degree thinks they’ve won; they still owe tons of money and received a degree that will be valued much less than other schools. The employer that hires this student with a “degree†loses; they hire an under-educated worker…"
Unfortunately your statement is one of the major problems that perputates the false illusion about education. The reason for getting a higher education was never ever for the sole purpose of getting a job. This is suggesting that the purpose of public schools is to farm and cultivate workers. If this is the case, we are in a world of trouble. This would mean corporate entities like Apollo Group and others will be funneling funds to schools and dictating their curriculum. I hope this never becomes the case.
I’ve worked at a for-profit online school that is just like UOP. The fact is, places like UOP have found a loophole in the system which allows them to ultimately profit from a lack in regulations in the field of higher learning. This is such a difficult topic to tackle, because the problem is multi-faceted. You’re dealing with not just an educational entity, but laws & regulation, private lending, and Federal lending. I’ve read some comments that say that these schools are operating within the current laws so therefore everything they‘re doing is okay. I would counter that by looking at the housing collapse. Many things that happened in the housing loan industry happened within the realm of law, but was clearly unethical. The point is this: more regulation is needed. That means, regulation of student loan practices, quality of the institution (course material, teachers, business practices, etc) and ultimately the relevance of the education that is received.
The issue is further distorted by students that are currently in class or have received a degree from these schools. The problem is similar to those that received degrees from degree mills. No student wants to be told that their education is substandard. No student wants to be told that their success was a result of the course material being watered down or made easy. The subjectivity of education in itself can make it extremely difficult to argue that the education is not up to par. What is education? What is learning? Because of this, many online schools can get away with offering courses that are sub par.
In addition, we’re told that this school may be Regionally Accredited and this other school here is Nationally Accredited, so therefore these schools are legit. But is that so? Do you know what the accreditation bodies look after? If you don’t, take a visit to each one and look at their requirements and what they look for to accredit a school. The US government does not regulate any schools. They look to these independent accrediting bodies as an indicator that these are quality schools. What happens if the quality in regulation slips?
So, why doesn’t more information about these for-profit schools become public? They must have a lot of employees that could spill the beans. Well, the answer is simple, greed & ignorance, or a combination of the two. Why didn’t someone expose what was happening on Wall Street? I’m sure some did, but the media didn’t grab hold and so traction never built up…and then everything collapsed. One person can not take on a billion dollar a year company, which is why the US government needs to. Many will disagree and say, “This is America; the land of opportunity…blah blah blahâ€. What needs to be realized is that there are a lot of bad people out there that are doing bad things everyday. Some of these people aren’t on the streets, they’re in business, they’ve got jobs, they’re owners or managers…whatever. They exist in private industry, and therefore there need to be regulations to prevent innocent people from being taken advantage of.
What will happen if we continue on this road? Well, for-profit’s surely win; they receive money through loans, which is guaranteed . The loan industry wins; they receive money from the student. The student that realizes that they’ve been duped & that the education is sub-par loses; they drop their classes and then owe tons of money to the school & through loans. The student that goes through and receives their degree thinks they’ve won; they still owe tons of money and received a degree that will be valued much less than other schools. The employer that hires this student with a “degree†loses; they hire an under-educated worker…if in fact they do hire that person. If they succeed in their field with these sub par degrees, then I must ask, did they really need the degree in the first place?
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