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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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I admit, before I came to the University of Phoenix as an Enrollment Counselor and now a Masters student, I knew little about the University or its mission. I just thought it was an online school that was all over the country. Now, I know that the University of Phoenix is dedicated to helping students who may not otherwise be able to obtain a college degree. I went to a traditional Big Ten school for my undergrad. Yes, I did well. Yes, I had the support of my family and friends. However, I did NOT have a good support system within the school itself and was left to fend for myself. I am proud that from the day a student inquires to the University of Phoenix, we support them on both an administrative and acedemic level, counsel them and help them achieve their goals. I work with people who AMAZE me every single day in regards to their ethics and integrity. We work so hard to ensure our students are well informed and know what they are getting into. We have very stringent guidelines in regards to acedemic and financial counseling. We are audited internally. I enroll people who are serious about graduating. Yes, we have enrollment goals but we also have retention goals. Retention = graduation. I do not enroll people who I think are going to drop out or take the money and run. I value education. I value my students. I believe EVERYONE deserves the opportunity to obtain a degree and make a better life for themselves. No school is perfect but we work to give people who may otherwise have no outlet, no chance, an opportunity to really succeed. I recommend you interview my students who cross every culture, gender, age, socio-economic and interest level and then see what type of story you have on your hands. I really enjoy Marketplace and listen to it daily. I support and donate to NPR and my local affiliate. I expect more.

I got my BSM last summer (2009) and I register to start y MBA in a week at University of Phoenix. I like the fact that I don’t have to sit in a classroom sharing space with people who don’t want to learn. Online is self process that I love. My complain about UOP is the fact that is so difficult to resolve financial issues since when I started my Bachelor I was absolutely convince that I have the regular financial aid (mean that I am not getting involve in debts) but after one year in class I receive a summary of my debt from Sallie Mae for $20.000.oo So when I call for explanation they told me that it was financial aid for not the same as I have before from my prior College where I earned my associated degree. I was feeling so sad and I just keep moving ahead since I was almost finishing my classes is like no more choice.
I say that financial advisor trick me up making me believe that I have 100% financial aid when I had 100% student loan that mean absolutely two different things. However, when I went to Phoenix for the commandments it was great the experience since you see how $22.000.oo work for fancy ceremony, University tours, souvenirs, and so on.
I am defending the quality of the education that they have, I just questioning how they lie to the student financially talking.

I am a University of Phoenix employee and graduate of both UOP and a traditional college. As far as college education, I can honestly say my experience at UOP far exceeded the traditional school. The instructors are employed in his or her field of study and bring these experiences to the classroom. College is what you make of it such as is life.
I am a proud employee of the University of Phoenix. I commend the University for high standards, continuous training, and contributions for the betterment of society.
I find this article and many comments disheartening for the many successful students, employees, and faculty who give back every day to help change lives for the better.

I am a UOP graduate, BSB/M degree program. I can say with full conviction that I earned my degree through hard work and diligence. Every class I took taught me something new. My mandatory Learning Team gave me one of the most valuable learning experiences I could ever have hoped for at a school. My instructors were all well-informed professionals working within the fields they were teaching. I was held accountable. I was made fully aware of my student loan responsibilities and academic responsibilities during my enrollment process: I also made sure I read everything before signing it. My degree has served me well. It has opened up doors of opportunities that would have otherwise stayed closed. If you cannot get a job with a UOP degree it is because of you--not the degree: Thousands upon thousands of us are proof of that. It is not fair that some people project their failures onto others. You are responsible for completing your own due dilegence. You are ultimately responsible for your own ignorance. You cannot go through life blaming others for your failures. Be accountable. Take responsibility. Maybe if some of these people would have stayed in school and worked harder they would have a completely different opinion. I would bet that the vast majority of these students who are complaining about UOP still haven't finished earning their degree. Oh and by the way, the operative word here is EARN. And yes, school costs money. Do you actually expect it to be free?!

I am an avid listener of NPR & have been for 7 years & this is the worst, most biased & unresearched broadcast I have ever heard. I am offended. I have been a high school guidance counselor of seniors for 2 years & networked with many college enrollment counselors; last year, due to the economy & a move, I could not find a high school job & after 6 months of unemployment I accepted a job at University of Phoenix as an Enrollment Counselor. At the Cleveland campus each counselor receives multiple annual day-long trainings on how to advise students in accordance to standards that meet both the Higher Learning Commission requirements (the same commission who also accredits The Ohio State University & Ohio University; we all have the highest level of accreditation offered in the U.S.) & requirements for being able to offer students federal financial aid. We must meet these standards, as any other accredited college does, to function. As for people who got nothing out of their earned credits - if students earned a credit at UPX & passed with a C- or higher, they would be able to transfer that to ANY college that shares National Accreditation – which included all highly accredited state & community colleges, and most private colleges. As for high pressure tactics – that is ludicrous. Enrollment Counselors only call students who personally have inquired online, in person, or who have been referred by a UPX student. If an enrollment counselor’s personality is more aggressive and/or leads to irresponsible borrowing for their student, then they are not doing the job they were trained for. I am proud to work for a company that is doing well in this economy, the employees have high morale & we are the largest university in the country – over 400,000 enrolled student & many more alumni. When numbers are that high, there will be some disgruntled students, and shame on NPR for making our hundreds of thousands of students, alums & employees question the college that they earned their HIGHLY ACCREDITED degrees from, or work for. Additionally, I also worked for Case Western Reserve University, one of the top universities in the U.S., in Admissions for four years, and am as proud to work at UPX, as I was to work for Case.

I am disappointed with such a biased story reported from what was a reputable show. The manner in which it was introduced was very misleading , or the reporter did not understand her assignment. I thought the story was about for-profit education, but it turned out to be a poor attempt to ridicule University of Phoenix and its students who have dedicated so much time and effort into earning their degrees. A proper approach would include other for-profit schools, and it would balance views from both sides to keep it close to what the Marketplace had originally promised. The reporter for this story should have used other sources to balance her story with the sources she had, such as Rambo who did not read the loan application. She answered questions such as “what amount are you requesting for your loan”? Someone “dropped the ball” long before she enrolled in University of Phoenix. As for Clark, eh… I think her vocabulary speaks for itself… Defaulted loans, schools left with debt, let’s blame the schools, because the students who drop out always have legitimate excuses to give up; “It’s too hard”, “too much work”, “I thought it would be easier”, “I didn’t think I would have to do actual assignments”. I could go on and on, but I think I have made my point. Everyone wants to blame everyone else for their failures, and are always looking for the easy way out. Bottom line, If you used the services, you are responsible for paying. Amy Scott, your story is a joke.

I got my BSM last summer (2009) and I register to start y MBA in a week at University of Phoenix. I like the fact that I don’t have to sit in a classroom sharing space with people who don’t want to learn. Online is self process that I love. My complain about UOP is the fact that is so difficult to resolve financial issues since when I started my Bachelor I was absolutely convince that I have the regular financial aid (mean that I am not getting involve in debts) but after one year in class I receive a summary of my debt from Sallie Mae for $20.000.oo So when I call for explanation they told me that it was financial aid for not the same as I have before from my prior College where I earned my associated degree. I was feeling so sad and I just keep moving ahead since I was almost finishing my classes is like no more choice.
I say that financial advisor trick me up making me believe that I have 100% financial aid when I had 100% student loan that mean absolutely two different things. However, when I went to Phoenix for the commandments it was great the experience since you see how $22.000.oo work for fancy ceremony, University tours, souvenirs, and so on.
I am defending the quality of the education that they have, I just questioning how they lie to the student financially talking.

I got my BSM last summer (2009) and I register to start y MBA in a week at University of Phoenix. I like the fact that I don’t have to sit in a classroom sharing space with people who don’t want to learn. Online is self process that I love. My complain about UOP is the fact that is so difficult to resolve financial issues since when I started my Bachelor I was absolutely convince that I have the regular financial aid (mean that I am not getting involve in debts) but after one year in class I receive a summary of my debt from Sallie Mae for $20.000.oo So when I call for explanation they told me that it was financial aid for not the same as I have before from my prior College where I earned my associated degree. I was feeling so sad and I just keep moving ahead since I was almost finishing my classes is like no more choice.
I say that financial advisor trick me up making me believe that I have 100% financial aid when I had 100% student loan that mean absolutely two different things. However, when I went to Phoenix for the commandments it was great the experience since you see how $22.000.oo work for fancy ceremony, University tours, souvenirs, and so on.
I am defending the quality of the education that they have, I just questioning how they lie to the student financially talking.

I have to say that I am very disappointed with the negative rap that the University of Phoenix is receiving from this news story. I have been employed by the University of Phoenix for almost 4 years and can honestly say that we are here to give people the opportunity and help them work towards and obtain a college degree. I have enrolled single parents, minorities, all age groups and have seen them graduate. We are here to help the people who want to be helped, to say anything else or to say that we target is absolutely ridiculous. We have the accreditaion and our students work hard to receive that degree. Many of my students are the first to graduate from college ever in their family, do you realize how good that makes someone feel. Our school is here to help and we take pride in doing so.

It took me 31 years to receive my associates degree. I went through the "traditional route" trying to work full time and take care of a family. classes were limited and often filled up before I could get into it. The people who ran the schools appeared as if they needed to take some of their own business classes because they made it so hard to enroll and be a student. I then found the university of Phoenix and because of their flexability and commitment to my success, I finished my degree in 8 months and have now begun a bachelors degree in managment. The classes are challenging and I am learning something new everyday.

As for the journalist ( and I use this term loosly) who wrote this article, Amy Scott, It might have served her better if she would have paid attention more in her history class when the studied about "Yellow Journalism". This is the biggest piece of contrived nonsense I have ever read and the Marketplace should be embarrased they ever ran such a article. Had she done interviews with a wide variety of students, including those who did graduate, She would have learned a much different story. I meet UOP graduates almost everyday and they are happy about their experience. This article is just one more example how true journalism has been corrupted to nothing more than opinion pieces written to forward one's adjenda. Lets all observe a moment of silence for the death of journalism in America. You are missed.

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