Troubles Grow for a University Built on Profits

Troubles Grow for a University Built on Profits

By SAM DILLON
Published: February 11, 2007

PHOENIX — The University of Phoenix became the nation’s largest private university by delivering high profits to investors and a solid, albeit low-overhead, education to midcareer workers seeking college degrees.

President William J. Pepicello says the university meets the needs of working students. But its reputation is fraying as prominent educators, students and some of its own former administrators say the relentless pressure for higher profits, at a university that gets more federal student financial aid than any other, has eroded academic quality.

According to federal statistics and government audits, the university relies more on part-time instructors than all but a few other postsecondary institutions, and its accelerated academic schedule races students through course work in about half the time of traditional universities. The university says that its graduation rate, using the federal standard, is 16 percent, which is among the nation’s lowest, according to Department of Education data. But the university has dozens of campuses, and at many, the rate is even lower.

In an interview, William J. Pepicello, the university’s new president, defended its academic quality and said it met the needs of working students who had been largely ignored by traditional colleges.

But many students say they have had infuriating experiences at the university before dropping out, contributing to the poor graduation rate. In recent interviews, current and former students in Arizona, California, Colorado, Florida, Michigan, Pennsylvania, Texas and Washington who studied at University of Phoenix campuses in those states or online complained of instructional shortcuts, unqualified professors and recruiting abuses. Many of their comments echoed experiences reported by thousands of other students on consumer Web sites.

The complaints have built through months of turmoil. The president resigned, as did the chief executive and other top officers at the Apollo Group, the university’s parent corporation. A federal court reinstated a lawsuit accusing the university of fraudulently obtaining hundreds of millions of dollars in financial aid. The university denies wrongdoing. Apollo stock fell so far that in November, CNBC featured it on a “Biggest Losers” segment. The stock has since gained back some ground. In November, the Intel Corporation excluded the university from its tuition reimbursement program, saying it lacked top-notch accreditation.

It adds up to a damaging turnaround for an institution that rocketed from makeshift origins here in 1976 to become the nation’s largest private university, with 300,000 students on campuses in 39 states and online. Its fortunes are closely watched because it is the giant of for-profit postsecondary education; it received $1.8 billion in federal student aid in 2004-5.

“Wall Street has put them under inordinate pressure to keep up the profits, and my take on it is that they succumbed to that,” said David W. Breneman, dean of the Curry School of Education at the University of Virginia. “They seem to have really stumbled.”

In the interview, Dr. Pepicello shrugged off the bad news. Many top corporations still pay for employees to attend the university, he said, and the exodus of top officials has resulted from a healthy search for new directions. “We are reinventing ourselves,” Dr. Pepicello said.

The government measures graduation rates as the percentage of first-time undergraduates who obtain a degree within six years. On average across all American universities, the rate is 55 percent. Dr. Pepicello said this was a poor yardstick for comparing other universities with his, which serves mostly older students who started college elsewhere. Alongside the 16 percent rate, the university Web site also publishes a 59 percent graduation rate, but that is based on nonstandard calculations and does not allow comparison with other universities, he said. The official rates at some University of Phoenix campuses are extremely low — 6 percent at the Southern California campus, 4 percent among online students — and he acknowledged extraordinary attrition among younger students.

“We have not done as good a job as we could,” he said, adding that the university was creating tutoring and other services to help keep students.

The university takes quality in the classroom seriously,” he said. The university brings a low-overhead approach not only to its campuses, most of which are office buildings near freeways, but also to its academic model. About 95 percent of instructors are part-time, according to federal statistics, compared with an average of 47 percent across all universities. Most have full-time day jobs. Courses are written at university headquarters, easing class preparation time for instructors.

The College Board reports the university’s annual tuition and fees as $9,630, about half the average at private four-year colleges and twice that of four-year public colleges.

Students take one course at a time, online or in evening classes, which meet for four hours, once a week, for five or six weeks, depending on degree level. As a result, students spend 20 to 24 hours with an instructor during each course, compared with about 40 hours at a traditional university. The university also requires students to teach one another by working on projects for four or five hours per week in what it calls “learning teams.”

Government auditors in 2000 ruled that this schedule fell short of the minimum time required for federal aid programs, and the university paid a $6 million settlement. But in 2002, the Department of Education relaxed its requirements, and the university’s stripped-down schedule is an attractive feature for many adults eager to obtain a university degree while working. But critics say it leaves courses with little meat.

“Their business degree is an M.B.A. Lite,” said Henry M. Levin, a professor of higher education at Teachers College at Columbia University. “I’ve looked at their course materials. It’s a very low level of instruction.”

In November, the university’s reliance on part-time faculty caused a problem with Intel, hundreds of whose employees it has educated. Alan Fisher, an Intel manager, said the company had decided to pay for employees to attend only highly accredited programs. Although Phoenix is regionally accredited, it lacks approval from the most prestigious accrediting agency for business schools, the Association to Advance Collegiate Schools of Business.

John J. Fernandes, the association’s president, said the university had never applied. “They’re smart enough to understand their chances of approval would be low,” Mr. Fernandes said. “They have a lot of come-and-go faculty. We like institutions where the faculty is stable and can ensure that students are being educated by somebody who knows what they’re doing.”

Dr. Pepicello defended the effectiveness of the faculty, saying instructors were carefully certified.

Most educators acknowledge that the university has helped traditional institutions recognize the needs of older students.

Some of the university’s detractors suggest that it has always relied too much on part-time faculty and raced too quickly through course material. Others say the university’s academic program was once better but has deteriorated in breakneck expansion — it has opened 50 campuses in a decade. Today, even a cursory Internet search will turn up criticism on sites like ripoffreport.com and uopexperience.com.

“Phoenix claims that 95 percent of their students are satisfied, but the reports we get indicate otherwise,” said James R. Hood, founder of a similar site, consumeraffairs.com.

Many reports follow a similar pattern. Students say they liked recruiters’ descriptions of the classes, but after enrolling concluded that they were learning too little or paying too much. Many who quit say they were left with huge debts.

Robert Wancha, 42, a former National Guard commander who is pursuing a bachelor’s degree in information technology at the university’s Detroit campus, said that in a computer course last fall his instructor, Christopher G. Stanglewicz, had boasted that he had a doctorate but did little teaching, instead assigning students to work in learning teams while he toyed with his computer.

Mr. Stanglewicz, reached at his home, acknowledged that he had covered only a fraction of the syllabus , partly, he said, because the university required him to cram too much information into too few sessions.

“Students get overwhelmed,” he said. Mr. Stanglewicz asserted in the interview that he had earned a doctorate in economics from the University of Kentucky. But the authorities there said his name was not in their records. (Dr. Pepicello said that Mr. Stanglewicz had never told the university that he had a doctorate, and that he was qualified to teach.)

Not all students are critics. Yvonne-Louise Catino, 43, of Bloomington, Minn., who is studying online for a doctorate, said she believed she was getting a rigorous education. In a week, Ms. Catino said, she might read eight journal articles and write several essays. “I love the online environment,” she said, “being able to direct where I want to go.”

But some students said their early enthusiasm had soured.

Stacey Clark, 32, an office manager in East Wenatchee, Wash., enrolled in online courses in April and was delighted to receive A’s in her first courses, she said. Later, Ms. Clark decided her instructors were too disengaged to criticize her work. One returned a 2,500-word essay on performance-enhancing drugs with an A but not one comment, she said.

“You’re not learning from an actual teacher, you’re teaching yourself,” Ms. Clark said.

Many students accuse recruiters of misleading them, and the university’s legal troubles trace back to similar accusations of recruitment abuses. In 2003, two enrollment counselors in California filed a whistle-blower lawsuit in federal court accusing the university of paying them based on how many students they enrolled, a violation of a federal rule.

After the lawsuit was filed, the Department of Education sent inspectors to California and Arizona campuses. The department’s report, which became public in 2004, concluded that the university had provided incentives to recruit unqualified students and “systematically operates in a duplicitous manner.”

The university paid $9.8 million to settle the matter, while admitting no wrongdoing. But the department’s searing portrait of academic abuse aroused skepticism among many educators.

Dr. Breneman was finishing a chapter on the university in a book he helped edit when he read the report in 2004. He said he found it “credible and compelling.”

When the book, “Earnings from Learning: the Rise of For-Profit Universities,” was published last year, it said the university’s academic model was convenient for working students, but included a “cautionary note” saying the recruiting scandal had raised “disturbing questions.”

Those questions are likely to dog the university as it defends itself in the lawsuit, which a district court had dismissed but an appellate court reinstated in September. The university could be forced to repay hundreds of millions of dollars if it loses. It asked the Supreme Court last month to review the appellate ruling, arguing that an adverse outcome in the lawsuit could expose it to “potentially bankrupting liability.”