Phoenix University, a for-profit corporation that pioneered the concept of online higher education, is going into a tailspin and appears destined for a fatal crash-landing. Along with the spirit of Thomas Jefferson, we here at The Ring of Fire say, good riddance.
Yesterday, the Wall Street Journal warned investors that shares of parent company Apollo Education Group, Inc. have been falling precipitously (28% in the last quarter alone!). According to the article, any improvement during the third quarter should be viewed “with caution.”
It has not been a good year for privatized, for-profit universities. Besides the recent bankruptcy of Corinthian Colleges, Inc., ITT Educational Services Inc. is the target of a class action lawsuit and is currently under federal investigation for allegations of fraud.
Phoenix U.’s parent company has also been having its run-ins with litigators and federal agencies. In 2011, Apollo Education Group, Inc. was targeted in a multi-billion lawsuit by the Department of Justice over allegations of fraud. Two years before that the Wall Street Journal reported that the company settled a whistleblower lawsuit over violations of the Higher Education Act for almost $80 million (including court costs and legal fees). Of course, Apollo did not admit to any wrongdoing.
These are only two examples. There are several more. Most recently, the Inspector General of the U.S. Department of Education issued a subpoena to Phoenix U. and Apollo Holdings, ordering them to turn over records of “marketing, recruitment, enrollment, financial aid, fraud prevention [and] student retention” for the previous seven years.
Phoenix U. has seen student enrollment decline by almost 38% since 2010. Projected revenues for the current quarter are down more than 9% over previous expectations.
It should come as no surprise. Despite the hype and awards displayed on its website, the fact is that Phoenix U. is little better than a diploma mill. The only real requirements for admission are a high school diploma or GED, and the ability to breathe. Consumer Affairs records hundreds of complaints from former students, ranging from privacy issues and excessive bureaucratic red tape to huge debt burdens. Students are expected to pay for classes that are canceled or from which they are dropped for no apparent reason. In an appalling number of these cases, student loan debts from attending Phoenix U. are four times as much as they would have been had those students attended a four-year public university.
And of course, need we mention the overblown “promises” of career opportunities for graduates?
Meanwhile, Apollo Education Group, Inc. spends about 18% of its annual revenues on marketing and advertising. According to Advertising Age, Apollo is among the top 100 advertisers in the U.S., ranking #62 in 2013.
Given all the dirt that’s coming out now, not even Don Draper and his Mad Men, for all their marketing wizardry, could help scumbag institutions like Phoenix U. Furthermore, Thomas Jefferson himself is coming back from the grave to wreak vengeance. Earlier this year, President Obama announced a plan to make attendance at two-year community colleges free. These junior colleges are the primary competitors to institutions like Phoenix U. While the President’s plan is unlikely to get past the current corporatist CON-gress, if it ever does become reality, it will most certainly be the end of the Flight of the Phoenix (University).