By Sarah Pavlus
For-profit university targets community college students
University of Phoenix says new relationships will restore profits, reputation
The University of Phoenix plans to roll out more than 100 new partnerships with community colleges in the coming year – a strategy that, if successful, will provide a much-needed financial and reputational boost to the nation’s largest for-profit school.
Facing declining enrollment and regulatory scrutiny, the University of Phoenix has targeted community college students as a safe and profitable investment. And some community college administrators, eager to offer their students more opportunities to earn a bachelor’s degree, are embracing the school’s overtures.
It’s a strategic business move for the for-profit giant.
The University of Phoenix has raked in billions of dollars through federal financial aid programs. But critics contend that the company serves students poorly and leaves them saddled with debt they cannot repay.
Now, as federal dollars are increasingly tied to student outcomes, the University of Phoenix is attempting to attract more qualified students from community colleges, in hopes of retaining its slice of the government pie.
The new partnerships will funnel graduates of associate’s degree programs at community colleges into bachelor’s degree programs at the University of Phoenix, providing the for-profit school with an influx of students who are more likely to graduate and repay their student loans, company executives say.
However, the company acknowledges that the specific details of the partnerships have not yet been established. Only two – with large community colleges in Virginia and Arizona – have been publicly announced, University of Phoenix spokesman Ryan Rauzon said.
Rauzon said the company hopes to roll out “more than one hundred” partnerships over the next twelve months, including several in California, which is home to roughly a quarter of the nation’s community college students.
Proponents of the new partnerships – including some community college leaders – say the University of Phoenix is an enthusiastic participant in unconventional programs that four-year public and private non-profit institutions are either unable or unwilling to try.
But the initiative also comes as the company is embroiled in controversy. Earlier this year, Democratic Senator Tom Harkin released a report that criticized for-profit colleges for predatory recruiting practices, low graduation rates, and high student loan default rates.
The report said that in the recent past, the Apollo Group, the University of Phoenix’s parent company, “appears to have made critical decisions that prioritized financial success over student success.” It added that the company has instituted some important reforms but that “serious concerns remain,” such as poor student retention – particularly in associate’s degree programs – and the fact that the company “makes one of the lowest investments in per student spending on instruction.”
The report concluded: “Because the company [the Apollo Group] received $3.8 billion in Federal financial aid, including over a billion in Pell grant dollars, these poor outcomes are particularly troubling.”
Immediately following the release of the Harkin report, the University of Phoenix responded with a public relations campaign to “set the record straight,” which included an open letter to its student body that pointed to, among other things, the importance of the University of Phoenix’s work with a “growing number” of community colleges.
“A wide open market space”
Community colleges and for-profit schools typically serve the same working, non-traditional student demographic. They “divide up the market,” explained Dr. Anthony Carnevale, an education expert from Georgetown University.
And as increased demand for bachelor’s degrees is driving many four-year public and non-profit private institutions to become more selective, it is unsurprising that community colleges seeking to build new programs would find an eager partner in for-profits like the University of Phoenix, Carnevale pointed out.
“It’s a fairly obvious deal,” he said. “It’s kind of a wide open market space at the moment.”
Carnevale acknowledged that the alliance may not be popular with some, but he said it could be beneficial if the for-profit college industry was adequately regulated.
The industry, however, has resisted additional regulation. The Apollo Group, along with other for-profit colleges, has lobbied aggressively against new federal rules proposed by the Obama administration.
During the most recent presidential election, the Apollo Group donated $75,000 to a super PAC that backed Republican candidate Mitt Romney, who opposed tougher regulations for the industry.
But the company has been quick to capitalize on the Obama administration’s promotion of community colleges. In interviews, University of Phoenix spokespeople portrayed their new partnerships as an extension of the Obama administration’s investment in community colleges and workforce training.
They also noted that Dr. Jill Biden, the wife of Vice President Joe Biden, teaches at Northern Virginia Community College, where the University of Phoenix has announced a partnership. Dr. Biden has traveled across the country speaking about the administration’s support for community colleges.
At its peak, the University of Phoenix enrolled nearly 500,000 students. That number has dropped to 320,000, which company executives attribute to additional regulation and increased competition online.
On recent earnings calls, Apollo Group executives have highlighted “new relationships with community colleges” among several initiatives the company has implemented to increase enrollment at the University of Phoenix.
The partnerships are intended to serve another purpose as well.
“These relationships strengthen our reputation,” then Apollo Group co-CEO Charles Edelstein told investors in June.
The University of Phoenix already has agreements – known as articulation agreements – with community colleges across the country that govern how a student’s credits will transfer from one institution to another.
Community colleges typically have articulation agreements with many institutions, both public and private.
As state and federal officials are calling for colleges to produce more students with bachelor’s degrees, these agreements, as well as other transfer programs, are becoming increasingly important.
Apollo Group executives say the new community college partnerships will expand these existing agreements in a strategic way, with input from local employers.
However, company officials have declined to disclose a complete list of participating schools or reveal the number of new students the company expects to gain from the initiative.
Two of the partnerships – with Northern Virginia Community College and Maricopa Community Colleges in Arizona – were announced at press conferences earlier this year.
A spokesman for the Maricopa Community Colleges in Arizona, when asked about its new University of Phoenix partnership, downplayed its significance.
Tom Gariepy, Maricopa’s District Director for Marketing and Communications, said that the school’s partnership with the University of Phoenix “is a standard agreement that was updated slightly to expand educational opportunities in manufacturing, healthcare, business, and hospitality.”
“The stress on those areas is a difference, but it is basically the same agreement that we have with many other institutions,” he added.
Maricopa has partnership agreements with 35 institutions, both public and private, according to Gariepy. The school’s transfer program with Arizona State University “eclipses anything we’ve done with any other university of any kind,” he said.
In Virginia, the University of Phoenix’s new partnership has generated controversy within the state’s higher education community.
There, the University of Phoenix is pursuing a “3-plus-1” bachelor’s degree program with Northern Virginia Community College (NOVA) that the state’s more traditional four-year institutions have rejected.
The arrangement would allow students to earn three years’ worth of credits at NOVA before transferring to a four-year college – in this case, the University of Phoenix – for their final year.
Virginia’s four-year public and non-profit private institutions say 3-plus-1 programs will produce inferior degrees and will be difficult to implement, but advocates of the arrangement argue that the state lacks career-oriented, affordable bachelor’s degree options – particularly for students who are working or otherwise place-bound.
“If our public universities won’t create the options, and our non-profit, private institutions won’t, then we have to seek other alternatives, and the University of Phoenix is one of those that we’re trying,” NOVA president Bob Templin told The American Independent.
“If we don’t have options for our students, that’s not acceptable,” he said.
Templin said that the 3-plus-1 program, if combined with a tuition discount from the University of Phoenix, will provide his students with additional bachelor’s degree options that are priced competitively.
He said his goal is to keep the total cost of tuition comparable to that of a four-year public institution in the state, although details of the program have yet to be finalized.
While public and non-profit private four-year colleges in Virginia are eager to work on improving traditional transfer agreements with community colleges, they are wary of participating in 3-plus-1 partnerships.
“I have talked with my presidents about that, and I have a very hard time finding any reputable four-year college that feels it’s appropriate or is comfortable offering a four-year degree when the student is only a student for one year," said Bob Lambeth, the President of the Council of Independent Colleges in Virginia.
"It’s sort of mission creep on behalf of the community colleges, at a time when they’re talking about being overwhelmed with enrollment and needing funding,” he added.
Lambeth also criticized NOVA’s decision to partner with the University of Phoenix. “I think it is inappropriate for community colleges to partner with for-profit schools. … I’m disappointed that that’s the direction that any state-supported institution would go.”
Janette Muir, Associate Provost for Undergraduate Education at George Mason University, a public four-year institution in Virginia, was also skeptical of participating in 3-plus-1 programs. "When you’re talking about a 3-1 program, there’s not a lot that Mason would gain from that kind of involvement. We would lose students, for one, and we would have to, in order to make that happen, have some major policy shifts here that would take a long time to make that happen,“ she said.
“It may be easier for him [Templin] to work within that kind of a for-profit setting, because for-profits are out to make money and they are interested in all kinds of innovation. I just think to make that kind of thing happen here would be a really difficult process,” Muir added.
Responding to criticisms of the for-profit college industry, Templin explained, “We believe that where proprietary institutions may have had practices that have been questioned, they haven’t traditionally been with students that have already demonstrated that they are completing associates degrees and transferring.”
Jeffrey Kraus, a spokesman for the Virginia Community College System, agreed that for-profit colleges could play a productive role in partnering with community colleges.
“Our focus is on creating pathways for affordable baccalaureate degrees,” Kraus said. “If our partnering institutions are willing and able to help us make that a reality, then they would be ripe for this sort of work.”
“I think pragmatism is what’s required right now,” he added. “Not turf wars.”