By many measures, the University of Phoenix is the most successful institution for higher education in American history. With more than 325,000 students currently enrolled—22 times the number at the University of Chicago—Phoenix is vast, and contains multitudes. On campuses scattered across 39 states, and online as well, it offers everything from associate's degrees in sports management to Spanish-language MBAs. And unlike most universities, Phoenix makes a hefty profit. Its parent company, the Apollo Group, produced margins of 11.7 percent last year on revenue of $2.9 billion. What began in 1976 as a small night school where firemen and policemen between shifts completed unfinished bachelor's degrees is now an educational and commercial powerhouse listed on NASDAQ, with a market capitalization of $7.4 billion.
But in recent years, the University of Phoenix has become the poster child for everything the mainstream academic establishment thinks is wrong about for-profit higher education. The school's aggressive recruiting practices and high dropout rates have drawn fire from The Chronicle of Higher Education, where a college admissions specialist in 2004 called Phoenix's approach "an affront to the principles that have been developing in college admissions over the last three decades." The head of the major accreditation body for business schools, the Association to Advance Collegiate Schools of Business, last year accused Phoenix of using "a lot of come-and-go faculty." The U.S. Department of Education has punished the school for insufficient hours spent in the classroom and illegal recruiting practices, exacting two settlements during the last decade totaling $15.8 million. "Their business degree," Henry M. Levin, a professor at Columbia University's Teachers College, told The New York Times last year, "is an MBA Lite."
Many of the criticisms are technically accurate. The school does have aggressive recruiters and skimpy class hours. The faculty is nearly all part time. Graduation rates are low, and the level of instruction can be too.
But much of what academic traditionalists see as problems, Phoenix advertises proudly as solutions. The university aims to meet underserved demand for post-secondary education, tailor-made to fit the individual circumstances of harried adults. Like other for-profit schools such as DeVry and ITT, Phoenix offers the educational equivalent of a subprime mortgage: not the best product the industry has to offer, but a potentially valuable option for people who might not otherwise get into a desired market.
As with subprimes, a nonnegligible portion of consumers won't be able to stay afloat, exiting school moderately poorer and perhaps not much wiser. But the students who do graduate—like the millions who use subprime deals to gain a firmer foothold in the housing market—have a much different story to tell. Their tales are not about sunshine on the quad, Saturday night football games, or ivy-covered walls. They're about a kind of practical, bare-bones education that you never see in coming-of-age films but that is usually superior to no education at all.
At the same time, the size of the Phoenix student body—like the number of homeowners during the recent bubble-has been artificially inflated by policies set in Washington. There are legitimate criticisms of the university. But the education establishment's hostility to the institution often lies elsewhere, in an attitude toward for-profit higher ed that is essentially an aversion to change and commerce, the same snobbish disdain directed at payday lenders, providers of adjustable rate mortgages, and inner-city fast-food vendors. Few sins are less forgivable in polite society than offering poor people products they actively seek.
From ‘Plague Spot' to
For-profit higher education is nothing new in America. Up through the 19th century, most doctors, lawyers, and accountants picked up their basic skills at schools that were out to make a buck. The army of typists and stenographers that midwifed the information age at the turn of the last century came pouring out of commercial institutions all over the country. One hundred years ago, most medical schools were still small trade operations run by practicing local or retired doctors as a way to supplement their income.
But in 1910, amid newspaper horror stories about quack doctors ("The Doctor Who Killed His Patients With Germs") and fears that the U.S. was falling behind the rest of the world ("Germany to Stop Quackery"), the Carnegie Foundation sent the prominent educator Abraham Flexner to survey the state of medical education in North America. The influential Flexner Report, which singled out Chicago's 14 mostly for-profit medical schools as "the plague spot of the nation," called for standardizing curriculum and dramatically reducing the overall number of diplomas issued. As a result, the 160 institutions that educated more than 28,000 med students in 1904 became 85 schools educating half that many in 1920. (Among the effects: a decrease in medical competition and an increase in doctors' fees.)
The Progressive Era also saw the creation of the modern research university. Schools such as Princeton, with its Institute for Advanced Study (founded by Flexner himself), hit on the magic formula of combining under one roof undergraduate education, graduate and professional training, and academic research. Universities expanded and began to swallow smaller medical schools. By 1935 there were only 66 medical schools left in the country, 57 of which were affiliated with universities, according to a study by the University of Virginia radiologist Mark Hiatt and the D.C.-based consultant Christopher Stockton.
After World War II, the baby boom and the GI Bill helped usher in the "golden age of higher education," a three-decade stretch in which America went from a country where two-thirds of adults hadn't even managed to complete high school to one in which more than 17 percent earned a college degree. Not coincidentally, this era was also the golden age of public funding for universities. Federal and state research grants and student aid became major sources of revenue for public schools and nonprofits. In 1972 Congress allowed for-profit colleges to sidle up to the government trough as well. Now students were allowed to carry what would eventually be called Pell grants with them from school to school; as with vouchers, the money adhered to the student, not the institution.
John Sperling was a middle-aged professor of humanities at San Jose State University in the mid-1970s when he decided to take advantage of what he saw as a gap in the market by risking his life savings, a whopping $26,000, to start a private school. According to Phoenix's official history, Sperling hatched the idea after realizing that "working adult students were invisible on the traditional campus and were treated as second-class citizens."
Initially, there was little more than a facility in San Jose called the Institute for Professional Development, dedicated exclusively to adult education—that is, education for students past their early 20s. At the time, Sperling found, it was taking adult students in the U.S. about eight years to finish a typical four-year degree, in part because nearly all university business happened during work hours. Even if classes were offered at night, the rest of the campus was typically closed, forcing full-time workers to take time off just to register for class, meet with a professor, or buy a book. By offering extended hours and a host of other individualized tweaks, Sperling made it possible for older students with jobs to satisfy all the requirements for a college degree in about four years.
Sperling's fledgling school left San Jose in 1976 and struck out for Arizona after being denied accreditation (not for the last time), in this case by the Western Association of Schools and Colleges. (Nonprofit regional accreditation bodies certify most schools in the U.S. based on site visits and other measures of quality, though schools do not need any accreditation to operate.) The Institute for Professional Development was reassembled as the University of Phoenix, winning accreditation from North Central Association of Colleges and Schools the following year.
The school grew quickly, graduating its first full class in 1981 and gaining accreditation for a nursing school in 1987. In 1989 it inaugurated an online campus. A few years later it launched an online library, one of the first of its kind, offering course materials and reference books that might otherwise require students to dig through the stacks of an academic library—a time-consuming luxury many Phoenix students can't afford.
Although the university is now best known for its online programs, in which students log on for lessons and group projects and deal with their professors via email, it has more than 200 physical campuses across the country, many of which are little more than leased rooms in buildings near a convenient highway off-ramp.