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.


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.


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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I have a very different take on this 2-day story than most posters. My unemployed sister signed up with UOP 3 years ago and I was skeptical then, especially after seeing some of the supposedly college level work she was doing (multiplying and dividing fractions, perfect scores for writing assignments that wouldn't get a C at the state school I attended). I held my tongue because she was already enrolled before I knew about it, the rest of my family didn't want me to discourage her, and it was my understanding that it was being paid for mostly with scholarships. She's now $20-30k in debt, and that will almost double if she finishes her bachelors there. With these two stories, I have more than just my own opinion to offer, although I truly dread having this conversation with her. I encourage those of you who are currently enrolled at UOP and the like to take a hard look at the value of this education and especially the debt you're incurring to get it.

I, too, found this article very slanted. It was also rehashed from very old news articles. I've read this stuff before from articles two years ago that you can find on the web! It did not give a balanced view. The person who wrote this article must not have ever taken an online course - or at least needed a ratings boost.
I received my MBA from a prestigious 'bricks and mortar' college by taking online courses! Yes - I paid just as much if not more than at the UoP. I loved it.
Many jobs today require computer savvy individuals. They need employees that are independent. Online schools fulfill these needs and do require more maturity and a more independent type thinker to be successful. I'm not sure if many younger people have those traits, yet. However, for an older person, this type of learning can be perfect for their needs. There have been studies done that online beats traditional learning - although a hybrid of the two types beats either.
As to the complaint about the cost and loans, this is nothing new. I have been reading about students from traditional colleges who are living with parents and are $100,000 in debt trying to pay off their student loans. Claiming ignorance about the cost of the loans seems to be the normal thing to do now. I will be having my daughter go to a community college before transferring to a higher priced college to complete her four-year degree. Shame on these students and parents who go to these expensive colleges that they can't afford and then ask where their bailout is! And shame on people who write articles that are this biased on what is supposed to be a prestigious news site!

"I thought the name of your program was Marketplace? In a marketplace, consumers make choices. The University of Phoenix complies with all FTC guidelines and state regulations and is audited aggressively by the Department of Education Inspector General. UOP's instructors use syllabi and employ adjunct professors that are shared by state and not-for-profit private schools -- that's why they share comparable accreditations."
Enron (Arthur Anderson agressively audited Enron too), WorldCom, Tyco, Adelphia, Phizer, Merck, Madoff, Citibank, Bear Sterns, and Bank of America etc. were all in compliance (at least we thought) made billions of dollars off of citizens. I suppose you are suggesting that compliance is synonymous to ethical behavior? Anyone who believes this, still believes that there was not a financial meltdown, forclosures and unemployment is not at an all-time high. The university may very well be accredited, but that does not mean that each program offered is.

I suppose that many individuals here think that this mulitimillion dollar corporation (Apollo Group) deserves a fair chance. Some people feel as though the corporate executives deserve a chance to display and defend their antisocial thinking and actions. I can not understand why corporate shenanigans is revered as being successful or having high moral standing.

Earning a 4.0 upon graduation does not guarantee a fulfilling career and does not pay back the loans that many of require in order to get an education. Education in this country comes at a very high price. If you are not a part of the money flow you will have to resort to attaining an education in order to make more than the pitiful minimum wage paid in this country. UOP is a part of this high price of education. It offers convenience for adults, which in turn requiring adults with families to pay a high price for this convenience. You may choose not to attend this institution, but if you have a family and need to work the alternatives are very abysmal.

Corporate slaves. It saddens me how some individuals defend their corporate masters I guess in hopes they will someday become part of the flow of money. This corporate educational instituion (UOP) is pilaging and cashing in on the hopes and dreams of students. Students do come out owing more than they could possibly pay back. Those who do pay back their loans had the means to do so in the first place or received an opportunity conducive to doing so. No one should ever think that this instution or any other like it has the best interest of the students at heart. There is a predermined end or a desired monetary outcome. Enrollment ensures this and not the opportunites that students get once they graduate.

The university of phoenix's recruiter was aggressive and misleading about the cost of attendance. My wife was told one thing and once she was enrolled, the amount was significantly different. The person acted as if they were caring and sincere and called several times a week. Once my wife enrolled, all that changed. The advisor acts as if they are being bothered. They do not return calls. I see now how deeply flawed the American educational system is due in part the fact that profit and greed is a motivating factor for these types of institutions.

To my great regret, I was unfortunate enough to come across this story. Considering myself an open-minded person and willing to construct an opinion based on empirical data and educated commentary; I approached this story with the full expectation of reading a well-balanced report filled with information that one could really delve into and make up their own mind. To my dismay the journalist chose to write a story that was unbearably one-sided and purposefully neglected to incorporate information that was offered to be provided by the University. Any reasonable reader can only surmise the conclusions are weak and without merit. This news story is tabloid journalism at best and lacks any journalistic integrity whatsoever.

A number of comments mentioned that employers will not accept University of Phoenix degrees and they have no value in the marketplace. Being that is such a broad statement, and that it is most probable those making that statement are not representatives of corporate America, one has to conclude those statements are based on nothing more than speculation and conjecture, and lack as much merit as the story itself. It is disturbing that some would so aimlessly criticize an institution of higher learning without having any personal experience which to base their opposition. Further, would base their comments and opinions on hearsay and questionable information. For those who may have such experiences, thank you for your opinion, but would challenge you not precipitously to conclude the institution fails to serve a valuable function within the educational system.

Whether you like it or not the University of Phoenix is an accredited institution at many levels. They hold accreditation with the Higher Learning Commission and is a member of the North Central Association. Moreover, their business programs are accredited by the Association of Collegiate Business Schools and Programs, which is notably one of two accrediting agencies recognized by Council of Higher Education Accreditation (CHEA). They hold accreditation in other disciplines, as well as, specific state licensures. The irony is that everybody who believes they lack educational quality is basically saying all of the aforementioned accrediting agencies are wrong. Interesting. And, if anyone were to notice, other “traditional” higher institutions are starting to follow the University’s education model. They are offering classes and full degrees on-line, and are starting to bring in persons who are experts in their respective fields to teach classes.

As now a former listener and reader of NPR, I hope you take the abundance of disdain comments and re-think how you present future stories. If you really want to take ownership in your obvious failure to promote an unbiased story, you would do a follow up that incorporates both sides of facts to allow for open, honest, and unbiased perspectives to be shared and thought through. Isn’t that what journalism is about – laying out all of the facts and allowing readers to formulate their own opinion, versus manipulating the truth, or for that matter, completely omitting other viable points of view?

By the way, how much is NPR making with online add revenue from this story?

Oh, one more thing NPR. Since I won't be listening to you any longer, you can forget about me donating to your LISTENER SUPPORTED funding campaigns. I would encourage all UoP students, faculty and family members to do the same. Maybe then they will consider the harm that their wreckless exposes can cause to innocent people.

I finally got around to responding to that ridiculous "expose" I heard on NPR. I have been an avid listener of 90.1 here in Atlanta for years. No more. That was a terribly offensive segment that failed to consider the many students and instructors of UoP who will be harmed by an attack on the alleged enrollment processes. I would expect that kind of mean-spirited bias at Fox News, but I thought NPR had more class. I have no problem with them making an honest attempt at rectifying a shady process if it's true, but they also slid in people who made a UoP education sound worthless. I got my degree from UoP and it helped me land a job and that job feeds my family. How will this reporter feel when someone out here can't get a job because they heard this story on NPR and discount the educational value of a UoP degree? I hope NPR has a conscience. Knowing that they could be impacting innocent students across the country just trying to make a living would keep me up at night. Let me tell you something. I was the first person in my family to earn a degree. I got my AS degree at a state university and because my son is severely autistic I was not able to continue working and going to night school. UoP allowed me the flexibility to finish my undergraduate, and to get a job where I can afford the special care my son needs. My entire family was at my graduation. Several of those family members heard the NPR story. Thanks for humiliating me. I hope it was worth it. Do you believe in KARMA? Maybe you should.


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