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University of Phoenix: More Information and Connections

October 13, 2006

A week or so ago (Oct. 3), I wrote on the University of Phoenix and its connections with the Mormon Church. In a CNN article today, UoP’s new president, Bill Pepicello, is interviewed. The subject of the interview is for-profit universities – continuing another thread I started earlier this week (Oct 10). Here are some intriguing parts of the exchange:

– “AP: One of the concerns some people have about for-profit higher education is how much money goes to marketing instead of education. According to its latest annual report, in 2005 Apollo Group spent nearly $485 million on selling and promotional expenses and $936 million on instructional costs and services.
Pepicello: When people say, ‘You can put some of that money into education,’ I guess I’d have to (say), ‘Why do they think we’re not doing that?’ We have a very detailed and robust curriculum development machine that allows us to use our over 20,000 faculty to develop that curriculum and then deliver it. It’s a matter of scale, instead of not dedicating the necessary resources to other aspects of it.”
– “AP: Another concern people have with for-profits is that Wall Street demands constant growth, whereas traditional universities can be the size they think best for students.
Pepicello: Our philosophy for serving students is the same as Harvard or Ohio State, and that is we’re mission-driven. The mission of, say, Harvard is to serve a certain sector of the population and their mission is not to grow. And that’s true of higher education in general. The reason the University of Phoenix exists at all is that all of those various (universities) and their missions did not provide access to a large number of students who are capable and wanted access to higher education. And that’s our mission.”
– “AP: How much does it cost to earn a bachelor’s degree at the University of Phoenix?
Pepicello: Students come to us at different parts in their career, plus our tuition varies by geographical region. But if you’re looking for a homogenized number, probably between $30,000 and $40,000.”
– “AP: Community colleges often resent the competition from for-profits. Should they refine their missions, and leave the for-profits to focus on what they do best?
Pepicello: I think community colleges have a strong and noble mission. They shouldn’t stray from that. Community colleges, especially in the West, are oversubscribed to the point where they simply can’t deal with the number of students that come in. The University of Phoenix and other institutions offer another route to access.”
– “AP: You’re a university president, but also employed by a shareholder-owned company. Aren’t there times when the best academic decision you can make isn’t the best business decision?
Pepicello: When people say for-profits don’t have as high a quality as traditional higher education, we have to, because our existence depends on delivering a quality education to our students.”


Although I have a background in the history of education, it’s difficult to bring that to bear on the subject of for-profit higher education. I think that’s why the subject is so fascinating to me: there’s little out there by way of comparison – it’s a new area for research.

The last entry in the above dialogue intrigues me the most. Pepicello basically evaded answering it: he went philosophical rather than addressing the specific question. There are times when the short-term rules, and it’s then that a business will do something to cut costs and maximize shareholder profit. Not meeting earnings ~expectations~ (not just being profitable in general) is oftentimes undesirable in terms of business marketability. – TL


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  1. I think to a certain extent the “non-profit” status of “traditional” universities is a red herring here. Clearly, the increased use of Adjunct professors is not the best educational decision, nor is, for example, the heavy non-educational infrastructural investment that American higher “education” has made over the last 20 years–and these decisions were made by so-called “non-profit” institutions who are competing in a marketplace for students. I'm not sure that the profit/non-profit distinction is meaningful in an atmosphere where university president salaries are skyrocketing, and they are increasingly simply “fund-raiser in chief” rather than an intellectual leader.


  2. CM: I agree that the seemingly relaxed rules for “non-profit” insitutions blur the lines. The increased use of adjunct faculty certainly supports your point, but I'm not sure about the “non-educational infrastructure.” I'd like to hear more abotu what sorts of activities you see falling in that area. On the salaries of university presidents, I'm not sure what their market value is, and perhaps I'm insulated somewhat from them due to my experience at Jesuit universities. In fact, I haven't seen any stories on presidents' salaries. Now I'm curious.

    All this aside, isn't there a difference between institutions built from the ground up with the profit motive in mind, and institutions that occasionally do things which garner a profit? This is what makes me think that the for-profit/non-profit classification is not solely a red herring. To me this makes the University of Phoenix unique and of historical-professional interest. – TL


  3. On Presidential Salaries: (Just as an example).

    As to non-educational infrastructure, I'd lump a great deal of university construction into that area: increasingly well-appointed housing, lavish new recreational facilities, offices (and staff) of various centers that deal with what I will loosely call “student lifestyle” issues, the proliferation of non-professorial “academic support staff,” and hey, for that matter, the growth of admissions departments. Each of these things are a choice, and each represents money not invested in classroom/research facilities and professorial salaries. I understand that they may be valid parts of a university's mission, but they are new additions to those missions, and are part of an “infrastructure race” to capture the best (and the most revenue-generating) students.

    It's a nuanced point, but if non-profit A builds a huge new dorm to gain a recruiting edge over B, C, and D, and then B-D follow suit, what we're seeing is competition almost exactly similar what we'd see of A-D were all nakely for-profit. Yes, there's still a patina of difference, but I'm not sure what that difference really is. Adminstrations in both cases are focusses on non-academic parts of their missions with the aim of “success” (or profit) defined in terms of a certain kind of student recruitment.

    Is there still a difference? I'm sure there is. But especially at the higher levels of higher ed, the difference is far less than we'd like to think. In how they are now structured, and in how they act, I'm not really sure if it is useful to think of the Harvard University Corporation, or Stanford (not just picking on the Ivies) or even the University of Wisconsin are really “non-profit” institutions.


  4. CM: Thanks for the long post. I'm glad you're finding this as interesting as me. Hopefully I won't kill this with my reply.

    I agree that “investment” in student housing, recreation, and lifestyle issues represent a kind of profligate university setting. What I haven't yet decided is whether that's my ~personal preference~ for a more spartan, intellectually-focuses student life, or whether it's a legitimate concern. Of course I'm leaning toward the former, as I posted a negative view on the construction of extravagant housing at some Illinois universities (see I don't know if this, however, was just a provocative story or a pervasive trend.

    As for salaries of university presidents, I feel the same way about them that I do CEO salaries in general, as well as the high salaries of baseball players. In the main I disapprove. It's not that I think individuals are undeserving of high salaries, but rather the contrary: the implication that non-executives, such as adjuncts, advisors, admissions folk, are ~not~ as deserving. I think most full-time professors make an adequate middle-class salary, and I obviously see some support staff as indispensable. Of course the standard of living in areas around universities does play a legitimate part (i.e. rural South Dakota vs. San Francisco).

    Salaries aside, I totally agree that any university simply seeking increased admissions without increasing quality is on the wrong path – the corporate path if you will.

    Are we 'preaching to the choir' with this conversation, or are there still some legitimate differences of opinion?

    As an advisor, I will have to say that I think a lot of “academic support staff” functions represent work abdicated by professors. Very few of them want to take the time to really philosophize with their students about scholarship, degree programs, vocations, etc. – TL


  5. TL–

    I'm not sure if we've worn it out or not. My basic points in pursuing this argument are as follows:

    1) “Non-profits” are acting more and more like “for-profits.” (building, CEO salaries, etc). You seem to agree.

    2) If 1) is true, then it changes how we assess something like University of Phoenix. Simply labeling it “for profit” and then presuming that it is making poor educational decisions to maximize profit is shoddy thinking in any case, but ESPECIALLY if the distinction in results beween NP and FP institutions isn't nearly as wide as the different nomenclature might suggest.

    3) My contention is that NP/FP status is irrelevant in determining educational quality, in light of the growing blurring of activity between NP/FP, and that as a result, we should not denigrate Phoenix for any reason other than documented failure of educational quality that is WORSE than what is happening at NP institutions.

    The situation is one of designing equivalencies. I don't think that Phoenix is really a direct competitior to the NP liberal arts institutions we both hold dear. The more accurate comparison would be to two year community colleges. And it may well be that Phoenix provides higher educational quality and is more responsive to consumer needs precisely because it has to fight against the kind of negativity attached to for-profit educational activity.

    It may well be that a phoenix education is worse than a low-tier state school, or one of the private schools I currently adjunct at. But its status as a NP/FP institution isn't relevant to making that determination.

    I know little about Phoenix and its orientation, but I bet that it is willing to tell faculty that they have to use email to communicate, and have to have technological skills (that they can pass on to their students). That willingness to assert a little control over faculty would be, in my mind, an institutional stregnth–and is a weakness of the non-profit liberal arts colleges I know quite well where older faculty still refuse to use computers, email, and in one case I'm aware of–even voice mail.

    More rambling, yes, but maybe now we can return to the Phoenix issue, and see if we're in agreement or still far apart.


  6. CM: As you noted, I do agree with assertion (1) on your list. I agree with most of (2) as well. As for (3), I'm less sure the distinction is irrelevant. I noted in my second post the distinction between being built from the 'ground up' with the profit motive in mind, and those institutions that do thing that occasionally turn a profit. At this point, I can't show or demonstrate ~exactly~ why that difference matters in the classroom. Your bringing it back to the fundamental duty of higher education is a good move. I have no statistical proof that the profit-motive harms teaching and learning, but I can speculate on ways that it might. Here are two (I have to get on some other work):

    1. A for-profit institution is motivated to reduce costs. That company then may higher a low-bid teacher to do the work. Students may complain, but the company suppresses complaints to keep the low-cost teacher. With this in mind, I just looked up the Schaumburg campus of the University of Phoenix on We know the weaknesses of this site from first-hand experience, but I unfortunately found only 3 professors rated (one finance, two business), and each received high ratings (avg. 4.5 of 5). The Wisconsin UofP campus had more ratings (57). The ones in business seemed to rate high, but most had only one rating. A computer science guy with 7 ratings scored horribly. It appears that UofP students are motivated to go to ratemyprofessors when the class is bad, as is the case at regular colleges. As you noted, most UofP classes seem to be practically oriented, so it's hard to gauge them against traditional four-year schools with extensive humanities programs. Still, because of the small sample size (2 schools, limited course offerings), I believe we have to consider my assertion incomplete;
    2. The online class experience, key in for-profit situations, is inadequate in fully and efficiently conveying the example of well-conducted classroom dialogue. Students cannot fully learn how to communicate or argue face-to-face. They miss subtleties of intonation, agreeable interruption, emotion, etc. Perhaps this applies best in humanities courses where – once again – the sample size is too small to gauge success.

    Well, because of work commitments, I'll need to leave this discussion for now. Given more time, I believe I can come up with more than two speculative reasons for educational inadequacy. – TL


  7. TL:

    It seems that these topics just pop up everywhere of their own volition.

    I spent a significant amount of time discussing the merits of online education with our good friend and colleague, John McCarthy, this past weekend.

    It sounds like your main problem with Phoenix is the on-line delivery method. If that is the case, how do we compare it to on-line classes offered by ostensible non-profit institutions? I think we can both say that we're aware of really low-quality programs offered by NPs these days, mostly because adult ed is big business. Phoenix may be the big name, but meanwhile, Marquette, Loyola, and plenty of other 4 year liberal arts schools are running on-line or other sub-prime structure courses and handing out Marquette or Loyola degrees.

    why are MU or Loyola doing this? Well, let's be clear–because these programs are very profitable. But I'm not sure how to fit that into the NP/FP dichotomy that we're discussing–which is why I argue that it's blurring.

    In any case, it seems to me that your primary objection is to schools that don't take their education seriously, and perhaps (I'm reaching here) aren't as liberal arts-oriented as you'd like (hey, me too!).

    That distinction, however, isn't about FP/NP. It's about mission. There are plenty of problems in higher ed, I'd agree. And if we're going to fix them, it's important to train our weapons on the right enemy.

    I'd argue that what most of us are reacting to is teh transformation of a college degree to a high school degree. This transformation implies some level of debasement, because a BA used to imply some measure of distinction. But the mainstreaming of a BA, just as with the mainstreaming of high school diplomas, etc, has meant some…lowering of the standards that were once associated with the degree. I don't think this transformation is the result of FP/NP (in fact, I'd argue that FP higher ed is only possible in a time where college education is mainstreamed as it never has been before), but rather the result of the continuing extension of education (or, put another way, the continuing inflation of credentials).

    All that FP institutions do is admit what they're up to. Everyone else is doing it to, and just hiding behind some outdated images. Any school that assigns tenure lines based on class registration, or designs survey courses to provide teaching experience for grad students (and thus replacing PhDs with, if lucky, MAs), etc is maximizing revenue and minimizing expenses. There may be educational reasons for it, but I'm really not sure that there's a difference in outcome.

    can we really say that an online course is worse than those 400 student lecture sections we've all heard so much about? and those are the college experience a vast majority of 4 year people have at 4 year schools.


  8. CM: It’s great to hear that Mr. McCarthy is alive and kicking. Pass along a hello to him from me. If he’s interested and has the time, I’d welcome postings from him too.

    My main problem with UofP is ~not~ its delivery method, but I will admit that I have ~huge~ concerns about online classes – especially in the humanities. In this it matters not, strictly speaking, whether the backing institution is FP or NP. I do agree that higher edu engages in that delivery method because of its profitability: it saves on maintenance costs. Again, this returns to the FP higher education because they are ~driven~ to keep costs low, and therefore favor online delivery. With that, of course I agree that a 400-student lecture hall education is no better than an online course. In that case, a 30-student online course ~is~ better because there is likely to be more student-teacher interaction. [Aside: I have never taught a 400-student course, thank goodness.]

    You point about mission is conceded. FP institutions neglect the humanities as irrelevant and frivolous expenditures. FP schools, therefore, turn out “organization” men and women, as well as pre-programmed thinkers (repeat: buy low, sell high one thousand times). How will this affect our country? Can a democracy survive with more and more of its managerial class educated like this, meaning in humanities-starved institutions?

    In some ways I actually don’t mind the idea of thinking about the B.S. as a standard degree, and rethinking education into a K-16 format. At least this would get the attention regulators in terms of inadequate diploma mill higher edu programs, and it would also cause better funding for college students (i.e. fewer loans). On the other hand, I’m not sure I want higher education any more in the clutches of politics than it is already (i.e. the asinine, continual renewal of the bill that provides Pell Grants).

    By the way, thank you very much for carrying on this conversation through the site. It’s is easier than e-mail, I think, and this has the potential to reach others. It’d be great if others jumped in, but I’m pleased to carry on with you. – TL


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