NCPA - National Center for Policy Analysis

EDUCATION FOR PROFIT

August 1, 2008

By many measures, the University of Phoenix is the most successful institution for higher education in American history, says Katherine Mangu-Ward, an associate editor at Reason. 

For example:

  • The University of Phoenix has more than 325,000 students -- 22 times the number at the University of Chicago.
  • On campuses scattered across 39 states, and online as well, it offers everything from associate's degrees in sports management to a Spanish-language MBA.
  • Unlike most universities, Phoenix makes a hefty profit; its parent company, the Apollo Group, produced margins of 11.7 percent last year on a revenue of $2.9 billion.
  • The University of Phoenix is now an educational and commercial powerhouse listed on NASDAQ with a market capitalization of $7.4 billion.

In recent years, says Mangu-Ward, 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 high dropout rates have been heavily criticized; Phoenix's dropout rate is an alarming 84 percent, compared with nearly 50 percent at traditional schools.
  • The Association to Advance Collegiate Schools of Businesses has also cited University of Phoenix for using faculty that is nearly all part-time; a full 95 percent of Phoenix instructors teach part time, compared to an average of 47 percent nationwide
  • 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.

But much of what academic traditionalists see as problems, Phoenix advertises proudly as solutions, says Mangu-Ward:

  • The university aims to meet under-served demand for post-secondary education, tailor-made to fit the individual demands of busy adults.
  • Like other for-profit schools such as DeVry and ITT, Phoenix offers the educational equivalent of a sub-prime 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.

Source: Katherine Mangu-Ward, "Education for Profit," Reason, July 2008.

For text:

http://www.reason.com/news/show/126856.html

 

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