NCPA - National Center for Policy Analysis


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.

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