What exactly happened to the University of Phoenix? Were people taking out loans and not paying back? Did they lose accreditation?
What went wrong in their business model? How did it get to where it is today and why was it bought out by a private equity firm?
This is right on. Thank you for your accuracy. I remember the days when students had to be over 23 and have a certain number of college credit hours. That was a completely different student than we see in our classes now.
Many factors are in play when considering the difficulties faced by UOP and other for profit institutions. One resulted from the act of taking the firm public creating the image of a growth stock at a time when the baby boomer generation felt a need to gain a college degree. The early business model required candidates to be employed and over 23 years old among other requirements. Another was Dr. Sperling's pressure on the organization to achieve 500,000 matriculated students by 2005 and one million by 2010. The institution was very profitable at the local level generating 60% to 90% gross margins depending on how one treated overhead allocations. Another factor was placing academic functions under the control of Regional VPs an Campus Directors, which were positions earned mostly by enrollment (sales) personnel. The pressure to retain students was a powerful force by the most influential function in the institution. Of course, the investigative reporting exposing fraudulent activities and students known as "runners" who enrolled only to gain access to student loans contributed to the load default problems. In the end, this story is about another corporate enterprise making a few people very wealthy based on well intentioned educational support programs meant to raise the educational attainment of Americans.