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Enrollment Abuse Allegations Plague University of Phoenix | The Nation

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Enrollment Abuse Allegations Plague University of Phoenix

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This article originally appeared on ProPublica.

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After federal regulators accused the University of Phoenix of systematic enrollment abuses in 2004, the school's parent company paid out nearly $10 million to resolve the allegations.

Phoenix allegedly had broken the law by tying recruiters' pay to enrollment numbers, US Department of Education investigators found, creating pressure to sign up unqualified students.

In the years since, Phoenix cemented its stature as the nation's largest for-profit school and the single biggest recipient of federal student aid. But some of the school's recruiters have continued to use high-pressure, deceptive tactics, according to a dozen current and former students and two former recruiters who spoke to ProPublica and Marketplace as part of a joint investigation.

The students said Phoenix counselors misled them about whether credits would transfer to other schools, pretended to befriend them and lied about financial aid. The recruiters said they were told to rope students in with phony claims that classes were filling fast, or by suggesting that federal grants would cover costs, even if that was uncertain.

Last week, Phoenix's parent company, the Apollo Group, announced that it had put aside $80 million to settle a whistleblower lawsuit that makes allegations similar to those in the 2004 investigation.

In making the announcement, Phoenix said its "compensation programs and practices were in compliance with the applicable legal requirements." And the university's president, Bill Pepicello, said in an earlier interview that if any recruiters had acted dishonestly, it was not with the company's approval.

Phoenix is not the only for-profit university to get into trouble in recent years. Over the past decade, federal and state agencies have found that other schools improperly paid recruiters based on how many people they signed up, falsified enrollment tests and fabricated financial aid documents.

But with the bad economy, the industry has boomed. Enrollments have leapt 20 percent in the last two years, as people look to gain skills or fill gaps in their resumes. Now the Obama administration plans to expand federal student aid programs to a record $130 billion, further benefiting the schools. Phoenix stands out. With 420,000 students, the school drew $3.2 billion in federal aid last year.

The federal government disburses aid directly to schools, which then use the money to cover tuition and other fees and return the balance to students.

Critics worry that more students than ever are at risk of being sucked in by questionable enrollment methods and left with thousands of dollars of debt -- often without graduating.

"There is nothing more counterintuitive than to spend massive amounts of money and end up with actual adverse consequences, to leave people literally worse off after spending money on them," said Barmak Nassirian, of the American Association of Collegiate Registrars and Admissions Officers, an industry group whose members include some for-profit schools.

But supporters say it's a mistake to paint the whole sector as scandal-ridden. Proprietary schools serve low-income and minority students, who often do not have access to traditional colleges, according to Diane Jones, a former Bush administration education appointee.

"I think to cast stones at the sector that is working the hardest to serve the most challenging students doesn't make sense," she said.

'Focused on the Numbers'

In July 2006, Brandon Burke took a recruiter job at the University of Phoenix in Portland, Ore. He'd previously worked at another for-profit university where he said he'd been pressured to enroll students so the school could collect the $50 application fee.

At first, things were different at Phoenix.

"It really was all about, 'Do the job the way it needs to be done and get the right people in here,'" Burke said.

But after two or three months, managers were pressuring recruiters to use what Burke felt were misleading techniques. Among other things, recruiters were encouraged to "create a sense of urgency," Burke said.

"One thing we would be told to do is call up a student who was on the fence and say, 'All right, I've only got one seat left. I need to know right now if you need me to save this for you, because this class is about to get full.' Well, that wasn't true," Burke said. "We were told to lie."

The technique was often successful, according to Burke, who said recruiters also led students to believe that course credits could be readily transferred, even to top schools such as Stanford University.

"One of the things we were told to do was, 'You say we are regionally accredited, which means that they are transferred anywhere,'" Burke said.

Phoenix credits can be transferred, but the recipient school decides which credits to accept, and how many. Stanford has a cap on the number of credits it will accept from online schools, and performs its own assessment of whether the courses are equivalent, a university spokeswoman said.

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