We should know by now that there are two areas where a pure profit motive never works: education and prisons.
That, of course, is not stopping Wall Street and private equity from continuing to invest heavily in both, nearly always to disastrous results.
The University of Phoenix (UOP) is but one example. No institution of higher learning should have a five-year student loan default rate that is higher than its graduation rate. This is not difficult to achieve for respectable, traditional non-profit universities and colleges.
UOP’s overall graduation rate is 17 percent. Its default rate is 47 percent.
UOP, which went public in 1994, had revenues of $4.95 billion in 2010. It ranked 386th out of 391 schools in the 2021 Washington Monthly list of national universities.
With a track record like that, you’d think UOP would try to recruit respected educational leaders.
Yeah, not so much:
The head of one of the largest for-profit universities in the country suddenly resigned months after taking the post.
George Burnett was appointed the president of the University of Phoenix in February, and at the time the university spoke highly of his “deep understanding of our purpose of helping working adults acquire a higher education.”
But new documents obtained exclusively by USA TODAY show that Burnett’s departure came after an inquiry by the Department of Education.
Specifically, the department had questioned Burnett’s time overseeing Westwood College, a for-profit college based in Westminster, Colorado with run-ins with federal and state regulators over deceptive advertising among other concerns. Some of those cases helped lead to the federal government canceling $130 million in student loan debt tied to the deception of Westwood College students.
The Department’s requests included questions about how long Burnett worked at the college and its parent company, Alta Colleges, Inc., but also his role in the school’s advertisements, recruitment strategies and job placement reports. Burnett was also the CEO of Alta Colleges.
The department also said it found credible evidence that admissions officers at Westwood were trained to use “emotional triggers” when talking to potential students and that they were “trained, directed, or encouraged to not take ‘No’ for an answer from the prospective student.”
“Did you participate in or attend Westwood’s training sessions for its admissions representatives?” read one of the 17 questions sent to Burnett.
So much for getting someone at UOP with excellent academic credentials to lead it away from being a diploma mill for low-income students who graduate to unemployment or jobs with pay rates assuring many of them might still owe money on their student loans when they die of old age.
And that’s not not all. According to Wikipedia:
University of Phoenix has been the largest recipient of federal GI Bill tuition benefits and the largest for-profit recipient by Pell Grant assistance funding. For the 2008–2009 fiscal year, its student body received more Pell Grant money than any other university. The university’s graduation rate is 17 percent, according to federal data that measures first-time, full-time (FTFT) undergraduate students who complete their programs at 150% of the normal time.
From 2009 to 2015, University of Phoenix received an estimated $1.2 billion of federal money issued through the G.I. Bill. The university enrolled almost 50,000 such students in 2014, twice as many as any other institution. Some critics of for-profit higher education have alleged that Apollo Education Group and University of Phoenix “prey upon veterans”. In 2013, the US Department of Defense ended its contract with University of Phoenix for military bases in Europe.
U.S. military commanders at Fort Campbell, Kentucky, allowed University of Phoenix representatives to erect advertising and place promotional materials in high-traffic areas. Access was provided in exchange for cash.
Ick. Just ick.
Wall Street makes money while taxpayers are once again stuck with the bills.