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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.
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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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I can't say enough of how disappointed I am of NPR. I've been a loyal listener and supporter of NPR for the last 9 years. I used to start every morning on the way to work with NPR. I say 'used to' because I have decided not to listen to your station anymore. I attended the University prior to coming on board as an employee. I did my thorough research on various educational options and decided that UOP was the best option for me. I have attended public higher ed in the past and I have learned more from the University than any other schools for that matter. You should be embarrased of the new low your station has reached with this article. I will be sending a letter to the local NPR station asking for my donation back.
Someone asked where the graduation rates were found. Here is a website you can use to see the rankings of all colleges who offer online classes. Click into the detail to see things like graduation rates. This is an annual ranking. According to this site (and I know at least 20 UOP employees who have confirmed it is accurate) UOP has an overall graduation rate of 4%. That is about the same number as their employees who are also students.
As far as the student who had no idea she had student loans, shame on her. How can you apply for loans and not realize you are taking out loans? I can't feel sorry for someone who simply doesn't pay attention or take responsability for their actions. All students should ask questions and actually read what they are signing up for!
Next item on my list is the quality of the education people may receive at UOP. I would say that it probably matters what degree program they are in. Someone else posted a comment that the value of your education/degree is really determined by the potential employers in your area. So, ASK THE EMPLOYERS what they think about a degree in XXX from UOP.
And last but not least, several people posted here that stated they are students of University of Phoenix and stated what a great education they are getting. Yet, they can't spell, use proper punctuation or grammar. Does that not count as being educated any more? Doesn't anyone else think it's important to possess these skills? Is this how they write their papers in school and do they get passing grades from their instructors? This is a professional, public forum. Not a texting chat room. Remember what happens when you post things and someone later Googles your name? They find everything you've ever done online. Is this what you want a potential employer to see when they Google your name?
I do feel like the article was pretty one sided. But I also know several employees who agree with what it says, several graduates who may as well not have a degree at all because of what employers think about their UOP degree and 2 people who have taught classes for them and laugh at the fact they can earn so much money by doing so little! So there is definately some truth to it. But I would have liked to hear from the other side of the coin in the article too. Why not speak to other for profit schools' employees, students and graduates and get some perspective. UOP is not the only online or for profit school out there.
I am an online student at University of Phoenix and was initially very disturbed by what I read. After doing my own research I realized that this article was very biased and untrue to journalistic standards. I have been a contributor and listener to National Public Radio for many years and had faith that there news would be unbiased and informative. It appears that for whatever reasons NPR has decided to use an article written by obviously biased authors. Unless a counter perspective is given in tonights broadcast I will no longer be a listener or a contributor. Shame on you NPR. I expect more from your broadcasts.
As for private institutions of higher learning, if they are all money hungry we should stop them all. Here is a list of a few other "Private" universities as well....
University of Notre Dame
Willamette University
Northwestern University
Stanford University
University of Southern California (USC)
Brigham Young University
Yale University
Harvard University
Massachusetts Institute of Technology (MIT)
Texas Christian University
(Yahoo, 2009)
Looks like a shady list to me.. What ever happened to individual accountability in this country. We have people suing other people left and right, and from the looks of it, wanting free money to. I would bet that they must have more in Finical Aid Award money than the required cost of the school to attend. Don’t you have to fill out and do a Stafford LOAN entrance interview? Doesn’t it say it is a LOAN on it, and you have to pay it back? What did they do with the extra money? Were they crying then? Or is it that the education was to hard and they had a hard time completing it? Why would anyone through a year and half of school away?
Yes, I attend UoPx and am working on my MBA. Let me attest, that it is HEAVILY ESSAY based, and that it is NOT easy. I put in about 15 hours a week just for my ONE class. I do think the information and instruction is good. Unlike these two in the article, or other posting, I will be getting something for my money... a DEGREE. I also know why I chose a profession that requires an MBA rather than Journalism!
Yahoo Directory. (2009). U.S. Private Colleges and Universities. Retrieved from http://dir.yahoo.com/education/higher_education/colleges_and_universitie...
I am a Phoenix! And I am removing NPR from my radio dial. How dare you release such an embarassing display of inadequate journalism. I'll miss my morning edition, but I cannot support any organiztion that would allow such poor, disparaging, one-sided media. Did you hire this journalist from the Fox Cable News network?
I am the wife of a Phoenix, and I am proud to be so. My husband has been in school for the last 7 years. He first earned his associate's from a junior college, then progressed to his bachelor's at UOP and now is two classes from his master's degree at UOP. Do we have loans? Absolutely! When Dave first started, we had one child. We now have 3, and will have our 4th in 2010. I am (now) a stay at home mom (yes, I do have my BSN from the University of Arizona).
The UOP standards for education are high. My husband has had to work hard every week to earn his grades. He has learned how to work better in a team environment because of their learning team assignments that are common to each class. The freedom that the UOP online education has provided for us has been invaluable. My husband has been able to complete his classwork after the kids have gone to bed or on the weekends when it doesn't take away from family time.
Was it worth getting loans? Absolutely! There is no way, in today's economy, that a single wage earning family can even consider going back for a degree without the loans. To the young lady who was shocked to find she owed money...well, I say shame on you. You should know better than to sign anything without fully understanding it and reading it. If you were truly coerced into getting a loan (which I highly doubt), you have no one to blame but yourself.
There are those proprietary educational companies that combine sales and management techniques from Glengarry Glenross, the Boiler room, and PT Barnum. University of Phoenix is just the biggest one. . I went through a Master's program at one of these schools as well as worked as an admissions advisor for two years. It was convenient, the books were solid resources, and the professors were competent at the graduate level.
Yet I was able to work an average of 52 hours a week and complete a Master's in a bit over a year by writing one 5-10 page paper in said week. In other words, it was way too easy. Employers know this and other schools know this.
While I appreciated the convenience, without pursuing another graduate or professional degree at a respected university, my graduate education is little more than something I could have ordered off of a matchbox in the eyes of prospective employers.
Of course, I did read the books and have the benefit of a solid primary and undergraduate education. Often, the people I spoke to in those two years did not have that benefit and it was obvious that their lack of preparation in primary school made them markedly easier to take advantage of in the sales process for those who were willing to do so.
Make no mistake about it, it was an institutional approach to pressure and deceive: Citing "urgency" and "admissions committees" which were both in fact non-existent. It was not just a few people being overly aggressive and deceptive as the spokesman for the industry postulates. (He obviously has a skewed sense of right and wrong.) These techniques were part of the institutional training and failure to use these techniques was a recipe for censure and dismissal.
Rather, it was the rare person who resisted this and actually recruited those who could benefit from a program. Yes, there are those who can benefit but just not as many as these modern day PT Barnums would like-hence the pressure to be deceptive.
These folks who were successful without being deceptive usually quit as soon as they could find another job. People have to eat and organizations like this can find willing workers in an economy where jobs are hard to find. (Opening an office/call center in say, Portland, Oregon where no one can find work is a good business approach. Then, churning through employees raidly also has a positive bottom line effect when they leave before they become eligible for benefits but are still productive for 3 months. But those are labor practices and a different subject for another time.
Regarding the degree, most of the market is aware of the reality of a mediocre, at best, education. Therefore, the degree isn't really respected in the marketplace. Nevertheless, there is a real need for this type of program in our country. The real crime is not their sales approach but their sorry learning outcomes for those who would be better served by attending a community college at a small percentage of the cost of these schools.
These programs may be good for people in the workforce already who need a "jump through this hoop" degree to get a promotion because they're quick and convenient.
But for those who aren't in the workforce who want to compete for jobs requiring a college education, the learning outcomes are not adequate, aren't adequately pursued by the organization, and they're just not competitive with a graduate who has had some rigor in their undergraduate and graduate education.
It's more about the federal financial aid than a solid educational product. Some of these undergraduate students should have been sent back to complete high school. That's another whole discussion though isn't it?
It is only in a country with a documentably failing educational system and no oversight on how we're using our scant resources to properly educate our citizens that something like this can happen.
It will not change until the regions which provide the accreditation for these schools become more vigilant and demanding regarding learning outcomes.
There is a need for the basic opportunities that these organizations provide but with the emphasis on getting the federal aid into the coffers rather than providing a real educational foundation for success, most of their undergraduate students would be better off attending a community college first and tben trying to find an appropriate state school.
There is a reason some of the better schools in this country don't accept transfer credits from University of Phoenix and it's not just arrogance and snobbishness. It's a realization that the learning outcomes are weak and don't prepare the student for real academic rigor and at the end, a real professional career. They won't be able to compete well as a group, though there are those individuals who could attend Bobby's Back Yard Barbecue and School of Higher Education that will do well regardless of where they go to school or even if they do at all.
There are, undoubtedly, many people really committed to education who work in this for profit arena. Unfortunately, they're not in charge and all one has to do is inquire to University of Phoenix and the direct competition to see how they do what they do.
If one is not appalled, then there's no accounting for common sense and a realistic sense of what is right and what is wrong.
If the state schools in this country want to find ways to grow and contribute the the betterment of the educational mess that we are devolving into, they'd take a page from University of Phoenix and Career Education Corporation, and begin developing proprietary and robust online educational opportunities for our citizens.
Failing to do so is a missed opportunity and short sighted.
My fear is that our inability to take the long view regarding education is going to result in a populace that simply won't be able to compete with the rest of the world 30 years from now. Schools with shoddy outcomes and PT Barnum sales techniques aren't going to enable us to compete with European and Asian cultures which are providing solid primary and secondary educational opportunites for their people.
We are wasting our precious resources by sending our money to these schools.
The first step is that the accrediting bodies need to care more about their educational product. If they did, these schools would have to step up.
I also have to disagree with what seems as a very biased article. I am a full time student with Univerisity of Phoenix and have also attended several other schools. I work full time and the only way I would be able to go to school and keep my job is to attend online courses. There are several items mentioned which are common place at every university I myself attended prior as well as many of my friends. First I would like to start with what the article seemed to stress as something out of the usual which is the majority of students at University of Phoenix use financial aid. I used financial aid at all my prior schools as well as my friends. We do not have trust funds to pay for our schooling and we along with millions of other Americans need financial aid to pay for our educations. I would like to know if the author of the article has a degree and if they used financial aid. My guess is yes unless they had a trust fund set up. The skills for learning clas that was brought up is another example of something that is important and common at most universities. I have a friend at ASU who is currently in ASU 100 which the entire content of the class is very similar to the skills for learning class I have taken at Univeristy of Phoenix. It seems the author simply focused on for profit universities but has no problem with state universities which by the way the majority of their students are using financial aid as well as receiving subsidies from the federal governemnt on top of their tuition paid for by federally backed loans. If the author is concerned about this they should be speaking about all universities since they all have students who use financial aid and since state universities also received subsidies from the government which one is costing the tax payers more money? I am also concerned with the story that a student thought they didn't have a loan. Anyone who uses financial aid such as myself knows that I have to select a lender and fill out a master promisorry note. I also get a notification from University of Phoenix when my financial aid is complete and it tells me what amount of my STUDENT LOANS were awarded as well as they are being sent. For me to say I did not realize I have a student loan I would have had to fil out a Master Promissory note and sign it without realizing I just picked a lender and signed a document promising to pay back my loan and ignore the letters I have received from the university as well as updates from my lender on my current loan balance and interest acrued.
I am currently employed at the University of Phoenix as an enrollment counselor and I have never been pushed or asked to perform any unethical or immoral practices to enroll any student at any time.
I am not a very productive enrollment counselor as I have not enrolled very many students in my 8 months here but I have never ever in my 30 years of being in the work force ever worked for a company or business that has treated me as well as the University of Phoenix has treated me.
I am surrounded by all levels of diversity as a current enrollment counselor and I work with some of the most productive enrollment counselors in the company (enrolling many students monthly)and they have NEVER mislead or practiced any unethical business practices to help students go back to school.
I hear their conversations daily they don't force or manipulate anyone into enrollment or financial aid,or personnel debt and they make sure that there are no surprises financially or otherwise prior to the student making the decision to attend UOP.
I hope that my career with the UOP is long and fruitful,I want to continue my education and career at the UOP and hope that other middle aged people will get the same wonderful benefits that
I have received, great work surroundings,great people,great friends and the opportunity to finish my education.
The negative comments made by others sound embellished I am not saying things are perfect anywhere but they are darn close to being perfect for me at UOP.
I think the UOP is doing great things for adult students,for the economy,for the employees and for the future, I WANT TO BE A PHOENIX !
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