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By Paul Bradley  /  
2010 June 14 - 12:00 am

COVER STORY: 2010 Top 100 — Phoenix Rising

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Phoenix Rising
Fast-Growing For-Profit Giant Tops CCWeek’s
2010 Top-100 Listings


By Paul Bradley

> 2010 Rankings
> Analysing the Data

> Display 1: Trends
> Display 2: Sectors

Inside an 18th floor restaurant affording a panoramic view of the Austin skyline, a reception was underway celebrating the accomplishments of John E. Rouche, who is marking his 40th year as director of the renowned Community College Leadership Program at the University of Texas.

CCLP graduates who now toil as college presidents and chancellors and top administrators came from near and far to praise Rouche’s critical role in the rise of the public community college from an educational afterthought to a shining star in the nation’s higher education constellation.

Outside, a billboard touting the value of higher education sat next to busy Interstate 35, the highway running through the country’s midsection from Laredo, Texas, to Duluth, Minn.

But the placard wasn’t about the public community colleges that Rouche and others have championed. Rather, the billboard was touting the for-profit behemoth the University of Phoenix. It featured a smiling, bespectacled woman and bore this message: “After the kids go to bed, I go to school.”

AP photo

A University of Phoenix billboard is shown in Chandler, Ariz. The  college is experiencing increasing numbers of students and graduates.

The billboard was not just an eye-catching advertisement, but also a visible illustration of the far-reaching marketing campaign that has helped propel the University of Phoenix Online Campus to the top of Community College Week’s 2010 listing of the country’s Top 100 Associate Degree Producers.

In overall associate degrees conferred, and in academic disciplines running the gamut from computer sciences to business management, the University of Phoenix Online Campus (the university’s associate degree division is called Axia College of the University of Phoenix) dwarfs the traditional sector in a trend that has been evident for years and is now accelerating.

The numbers are staggering. In the 2008-09 academic year, the online giant conferred 23,824 associate degrees, a 97 percent jump from the year before, and more than three times as many second-ranking institution, Florida’s Miami Dade College.

The University of Phoenix Online also topped CCWeek’s Top 100 Grand Total listing in 2007-08. But the gap between Phoenix and its closest competitor is widening. In the 2007-08 academic year, Phoenix conferred 4,072 more degrees than the second-place college; in 2008-09, the comparable number was 16,335.

Growing Dominance

A closer look at the numbers underscores the growing dominance of the University of Phoenix Online Campus. It conferred the most degrees among African-Americans — 2,988 in all, a 127 percent increase from the year before. Some 12,298 non-minority students earned an associate degree, more than any other institution in the country and a 116 percent increase from the year before.

Pick the academic discipline — business and management, computer and information sciences, criminal justice, family and consumer services, education, health professions, security and protective services — and the University of Phoenix Online Campus leads the way.

CCWeek’s analysis comes at a time when the for-profit sector of higher education in general — and the University of Phoenix in particular — has cemented its place as the fastest-growing segment of higher education. In 2008-09, for-profit colleges conferred 11 percent of all associate degrees. Today, about 3,000 for-profit colleges around the country educate about 10 percent of all American college students.

But those students consume about 25 percent of all federal financial aid. Moreover, according to federal data, 21 percent of for-profit-college graduates defaulted within three years on loans they began repaying in fiscal year 2007, compared to the 12 percent rate for all borrowers. Those facts have placed for-profit colleges squarely in the sights of federal regulators.

The U. S. Department of Education is writing new rules that would rein in the booming for-profit education sector by eliminating federal aid to colleges whose graduates don’t earn enough to repay their student loans.

Consumer advocates say students, and the taxpayers underwriting guaranteed federal student loan programs, should be protected from costly programs whose graduates end up with low-paying jobs or no job at all. For-profit colleges and their backers, however, say the proposal would shutter job-training programs at a critical time and deny an education to populations who are shut out of traditional institutions.

AP photo

Aja Holmes studies for her online college classes at The University of Phoenix alongside her daughter Ania in Raleigh, N.C. The college’s online campus conferred more associate degrees than any other institution in 2008-09, according to a CCWeek analysis.

According to some community college observers, the for-profit growth trend is being fueled not only by the economic downturn, but also by the shrinking budgets afflicting colleges. As the sagging economy has depleted public treasuries, public financial support for community colleges has plummeted, even as enrollment has set new records across the country.

Amid those realities, the geometric growth of institutions like the University of Phoenix Online should come as no surprise, said Stephen G. Katsinas, director of the Education Policy Center at the University of Alabama.

Logical Outcome

“It is the logical outcome of the long-term disinvestment in public higher education at all levels,” Katsinas said. “If you did an overlay mapping where the new proprietaries are located, my bet is that they have grown at precisely the locations where demand has grown the most, and that have simultaneously suffered most from the long term state disinvestment in public higher education.”

Katsinas said that in a 2009 policy center survey, 34 of 48 responding states reported that community college budgets had been cut in mid-year. Four of five states reported that community college tuition had been increased.

The budget crunch has created a pressing capacity problem for community colleges, said Diane Auer Jones, a former assistant secretary for postsecondary education at the U.S. Departmentof Education. Colleges are struggling to meet the demand of the hordes of students arriving at their door. They are holding classes early in the morning, late at night and on weekends to meet burgeoning demand. Some colleges are turning students away or placing them on waiting lists. Students are finding that they can’t get the classes they need to earn their degrees.

The head of the California Community College System, for example, an estimated 140,000 students were turned away over the past academic year and thousands more are having trouble enrolling in summer classes.

Into that void have stepped for-profit colleges, particularly those that offer robust online programs, Jones said. Those programs appeal to working adults because they empower students to pursue their educations on their own terms, at their own pace and on their own schedules. The agrarian calendar which rules at most public institutions is a thing of the past at online schools.

“When you look at non-traditional student populations, online learning serves them in ways that campuses don’t,” Jones said. “Online learning really does serve a population of people who can’t squeeze anything else into their day. Online opens doors that traditional campuses can’t, or won’t.”

“The for-profits are leading the way in online learning. They have figured this out. And they have a distinct advantage. They have investors that give them money to fund programs. That’s a resource that’s just not available to non-profits.”

Though some colleges view the for-profit sector as a threat, George Boggs, president of the American Association of Community Colleges, believes the sector has an important role to play if the country is ever to meet the Obama administration goals of increasing the number of college graduates by 50 percent by the year 2020.

“Some of them do very good work,” Boggs said.

Boggs doesn’t view public community colleges and for-profit institutions as being in direct competition for students. Community colleges have close ties to their communities, an attribute for-profits can’t match, he said.

While community colleges provide access to a low-cost education, low-cost is not part of the for-profit business model. Tuition at for-profit colleges is as much as seven times what a public community college charges and can rival what elite colleges charge.

What does trouble Boggs is the possibility that for-profit colleges, already awash in riches, will one day be able to tap into public funds now reserved for public institutions — Title III money, National Science Foundation grants, Department of Labor job training funds.

Funding Streams

During the recent reauthorization of the Higher Education Act, public colleges successfully fought off efforts mounted by the for-profit sector to classify all colleges and universities within a single definition, which would give for-profits access to billions of dollars in public money.

“I’m not worried about a competition for students,” Boggs said. “But I do fear they are after our funding streams. They have enough money already. We are providing a public good. I don’t think we should be giving public money to them, any more than you would give money to a hat maker.”

For-profit colleges already can access billions of dollars available through the federal student loan program, and that’s the focus of efforts by regulators to rein them in. The U.S. Department of Education is expected to soon issue new proposed regulations, working off an earlier blueprint released in January.

To be eligible for federal aid, federal law requires that vocational programs “prepare students for gainful employment in a recognized occupation.” But how to define “gainful employment” has remained an open question.

The DOE has come up with a possible solution: it is considering tying a for-profit college’s eligibility for the student loan program to the post-education income, debt loads, degree completion and loan repayment rates of its graduates.

Boggs is among those who believe more federal regulation of for-profits is overdue. The profit motive can become so all-consuming, he said, that some institutions might cut corners on educational quality as they chase the almighty dollar.

Kevin Carey, policy director of the Education Sector think tank, shares that concern.

“Too often, for-profits see this as an opportunity to be taken while public community colleges see this as a problem to be managed,” he wrote in an email.

“For-profits. . . .have a different mindset — for-profits have organizational cultures grounded in the goal of educating as many students as possible. Many publics only want to serve a certain number of students, and no more. It’s an open question as to whether for-profits are providing a ‘good enough’ education, but then it’s an open question for community colleges too, which leads us back to the need for more public scrutiny, transparency and consumer information.”

Said Barmak Nassarian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers: “I have no problem with people making a profit. It is not necessarily evil. What is evil is that the profit motive will trump everything else if it is not regulated. Given the current lack of oversight, the for-profit sector is dominated by quick-buck artists. You have some programs that are credible, and others that are designed only to make money.”

“The root of the problem is the lack of oversight and allowing private industries to tap into the public treasury. The severity of the recession and the abdication of the public sector have created a perfect situation for the for-profits.”

Sara Jones, a spokeswoman for Apollo Group, Inc., the parent company of the University of Phoenix, told the Associated Press that added oversight should not “restrict educational access, limit career choice or unfairly disadvantage historically underserved student populations.”

The for-profit sector has been lobbying Congress, including trying to persuade minority legislators that minority students would be harmed.

For-profit college leaders are pushing for fuller financial disclosure to students as an alternative. Most observers, however, anticipate that new rules will closely resemble those which the government already has proposed.

Regardless, the for-profit sector appears poised for even more growth as demand for higher education continues to grow.

“The bottom line is that if students want and need to go to college, someone will enroll them, and if community colleges can’t or won’t do it, we can’t blame for-profits for picking up the slack,” Carey said.

Comments: editor@ccweek.com

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