Monday, February 12, 2007


Thoughts on the University of Phoenix

The New York Times had a story on Sunday (here) detailing the legal troubles the University of Phoenix is facing. In a nutshell, they included a shockingly low graduation rate, Intel's refusal to reimburse tuition there for its employees, allegations of serious overselling by its admissions reps, extreme reliance on adjuncts (about 95% of its faculty), shaky quality, and a general insistence on putting profits before anything else. The story lacks a punchline, since it's mostly a laundry list of accusations without much context. I'll try to add some nuance, to the extent I can.

(Unlike most higher-ed commentators on the University of Phoenix, I've actually worked in both for-profit higher ed and traditional higher ed. In my time at Proprietary U, I went from adjunct faculty to full-time faculty to administration, so I've seen the inner workings of for-profit higher ed from several angles. I've written before on the specific differences between for-profit and traditional higher ed.)

Some of the allegations, which seem shocking on the surface, aren't really all that different from much of what happens in the lower tiers of public higher ed. Many community colleges rely primarily on adjuncts. The worst offender I know of, Rio Salado College, has an adjunct percentage well into the 90's. (Rio Salado is in Maricopa County, Arizona, which is where the University of Phoenix was born. Maybe it's something in the water?) Intel's refusal to reimburse tuition was based on UoP not being AACSB accredited. Most schools aren't. UoP is regionally accredited, just like public colleges and universities.

Any organization with extremely rapid growth for an extended period will have issues with personnel quality. It's hard to hire selectively when you're hiring frantically. Anybody who has had to staff sections with adjuncts can tell you that when you get down to the last week before classes start and there's a full section unstaffed, you go as low as you have to go. Multiply that by an entire institution.

Low graduation rates can be read in several ways. The Times implies that it indicates poor quality, which is certainly one possibility. It could also indicate high standards – weed 'em out – or a heavily non-traditional student body or a transfer orientation or even high employer demand. (At the peak of the tech boom in the late 90's, some of the attrition at Proprietary U was driven by employers poaching our students before they graduated!) My guess, based on my time at Proprietary U, is that part of the issue is a serious lack of remediation for students who need it.

It's hard to turn a profit by teaching. (It's even harder to turn steadily-increasing profits through teaching, since it's nearly impossible to improve the 'productivity' – in economic terms – of instruction without either watering it down or pricing yourself out of the market. At publicly-traded colleges, it's not enough to make profits; you have to make steadily increasing profits. It's a subtle but important difference.) At most traditional colleges, to my understanding, teaching is done at a loss. The difference is made up through grants, philanthropy, endowment returns, and (increasingly) royalties. To turn a profit by teaching – to go without an endowment or philanthropic giving, and to eschew research grants – requires a difficult combination of high tuition, very low overhead, and really aggressive marketing.

High tuition is self-explanatory. The trick is getting students to pay it.

The Harvards of the world do it by selling prestige. Proprietaries generally don't have that option. (Sentence I've never heard: “Wow, you got into DeVry!”) Instead they market job relevance and customer service.

Honestly, I was surprised to read of UoP's low graduation rate. If true, then UoP doesn't understand its own business very well. At PU, retention was everything, since the private-sector term for retention is 'repeat customer.' If you could get a kid to make it to graduation, you got 8 or 9 semesters of tuition out of him; if he dropped out, you were lucky to get two or three. We were all about retention. In my admin role, I got a report every Tuesday listing the drop percentages of every section in my subject areas, along with the names of the offending instructors. It was made abundantly clear to me that instructors who frequently topped the list were to be Talked To, and either reformed or dismissed. (Obviously, PU didn't have a tenure system.) That rubbed me the wrong way, and was one of the factors that drove me to look for jobs in traditional higher ed.

Of course, in technical areas, a certain amount of math is required, and the kinds of students who found their way to PU were often students who had struggled with math. At a cc, we'd resolve the tension through extensive remediation. Get the students up to snuff, then turn them loose. At PU, we did everything humanly possible to avoid remediation, since students wouldn't pay premium tuition to remediate. If we told them they needed remediation, they usually walked. (“I'm not paying good money for a course that doesn't count!”) So the struggle was to improve retention without resorting to remediation. Grade inflation had natural limits, since one of the selling points PU used to recruit was a very high placement rate with employers at pretty good starting salaries. If PU started graduating knuckle-dragging mouth-breathers, the placement rate would soon drop, and PU's reason to exist would evaporate. The usual faculty suggestion – raise admissions standards – was dismissed out of hand, since the short-term cost of smaller entering classes was presumed to be prohibitive, and the stock market is famously intolerant of short-term losses.

One method was to ask faculty in the intro courses to be superhuman. The results were, at best, mixed. Another solution – after the tech boom imploded and admissions numbers started cratering – was to come up with a category between 'remedial' and 'credit-bearing.' Welcome to the 'prerequisite skills' course! Since I left, I've heard they've developed a 'self-paced' independent 'refresher' workshop. Anything to avoid the 'R' word.

Certainly, the Admissions staff overpromised. One of the banes of the deans' existence there was helping students who had been sold a bill of goods come to grip with Objective F-ing Reality, without walking out the door. Part of that was a basic failure of accounting. The Admissions staff got credit for the sale if the kid stayed in school for thirty days; after that, attrition was blamed on Academics. So the Admissions staff would do what it had to do to close sales, and we got stuck fixing the leaks (or not) after the fact. Admissions staff were held to strict sales quotas and dismissed if they didn't make them, so they did whatever they had to do. The Admissions director at my campus once admitted to me that one of their most effective selling points was to underplay the general education requirements (my area). That explained a lot about the student attitudes the faculty encountered.

If I were appointed czar of the University of Phoenix, my first move would be to upgrade the faculty (hire a significant cohort of full-timers) to handle students with limited skills/motivation/time. Until they improve their graduation rate, they're going to be in serious trouble. Yes, that would entail a short-term cost. But it's the right way to go. Obviously, that strategy would crash headlong into the stock market imperative of quarterly returns, but I'm increasingly convinced that private equity is the way for for-profit higher ed to go. Yes, all that public capital sloshing around can be great fun for a time, but it creates pressures that I don't think any institution has yet figured out how to handle. They need patient capital, which means private capital.

(My gloriously brilliant idea, if I do say so myself, is the 'upscale' proprietary: Mercedes U. Make it expensive, difficult to get into, and snobby as hell. Yo, Venture Capitalists! Email me! I've even got a rudimentary business plan! Hallooo...?)

Like many higher ed observers, the Times lumps a number of disfavored trends into one category (usually called 'corporatization' or something like that) and assumes coherence among them. It's tempting, it makes the observer feel morally righteous in his indignation, but it's inaccurate. Most successful businesses pay at least some attention to quality control, lest they lose out to competitors with better products or services. UoP, apparently, has been neglecting quality control, in the name of reducing overhead. There are real, quantifiable limits to that. An intelligent for-profit college wouldn't take a 'slash and burn' approach to students, since they're much more expensive to recruit than to retain. Faculty are the front line personnel in dealing with students. Taking a slash-and-burn approach with faculty can only poison the attitudes of the people with whom the students come into contact the most. It's not 'corporatization': it's lousy management. There's a difference.

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