NCPA - National Center for Policy Analysis

The Rise of a National University

March 8, 2004

The University of Phoenix is leading the race to become the country's first university with a physical presence in every state, say experts. Although nearly half to its students take courses online, the for-profit school also offers classes at more than 39 locations in 29 states, Puerto Rico and Vancouver, British Columbia.

Over the last decade, the Apollo Group, parent company of the University of Phoenix, has enjoyed an explosion in revenue and net income as increasing numbers of working adults enroll in its degree programs:

  • The company's $13-plus billion market capitalization far exceeds the endowments of nearly every private college except Harvard University.
  • In 2003, revenue reached a staggering $1.339 billion; while profits for the same year reached $247 million from $4.9 million in 1994.

Phoenix has more than 186,000 students in 91 countries. What has fueled its growth? Along with the convenience of night classes and the use of Internet technology to lower operating costs:

  • The university's operating expenses are lower because most of Phoenix's instructors hold full-time jobs and only teach nights and weekends; professors earn $1,000 to $1,500 on average for a five-or six-week class.
  • In 2002, the University spent $32.7 million on advertising for both its online and campus programs -- more than any other school except fellow for-profit competitor DeVry University.
  • Phoenix is the largest recipient of federal funds, deriving 62 percent of its net revenue from students who receive help from the federal government's Title IV student financial aid programs.

Now, the champion of education for working adults is training its sights on traditional college students. It plans to serve that market by opening Axia College in Phoenix during the next few months.

Source: Katherine Young, "Dealing in Diplomas," Dallas Morning News, February 29, 2004.


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