The Dot-Degree Boom

The Nation: Online Education Gets The Green Light

(The Nation) 

In an investigation of Phoenix's recruiting practices in 2003, investigators in the Education Department's financial aid division heard that recruiters who failed to meet goals were sent to labor behind glass walls, "counseling" students to enroll from a room barren except for folding tables and banks of telephones. No breaks. No vacations. And if they continued to fail, no job.

A recruiter could earn $750 for each student enrolled. Management pressured employees to enroll as many students as possible, and to do "whatever it takes." If a prospective student could find a better or cheaper option at a local community college, recruiters kept it to themselves.

Employees told investigators they learned that only one thing mattered at Phoenix — getting "asses in classes." Federal law, however, mandates that college enrollment counselors not be paid a bounty per student, to insure that counselors do what is best for the student, rather than for themselves or the company.

As a result of the investigation into Phoenix's Red Room recruiting tactics, the Apollo Group paid $9.8 million in fines in 2004 — the largest fine ever levied by the Education Department. Late last year, the Education Department Inspector General found Phoenix owed students $10 million in unreturned tuition payments. The company was also fined $6 million in 2000 for improperly calculating student aid and for not offering enough study and instruction hours to meet federal requirements. This came a year after paying a $650,000 fine for failing to refund loans.

In fact, the Education Department found Phoenix in direct violation of the Higher Education Act. "The actions of UOP and the system it has established cultivates and maintains a corporate culture in defiance of UOP's fiduciary duty." Phoenix, investigators said, "flaunts the department's regulations."

This is where Tyrone Jacobs ran into trouble. Hundreds of miles from where he sat in Little Rock, a counselor in that nondescript office park in Phoenix told him he would lose his financial aid if he postponed his classes. Technically, according to federal law and company policy, Jacobs could drop out between semesters, re-enroll later and receive the same financial aid. But the high-pressure enrollment counselor talked him into staying, and what followed was an exercise in frustration, as Jacobs battled a company that seemed more committed to collecting tuition than providing him with an education.

"They were pressuring me to stay in the class, they were giving me false promises," Jacobs said.

In a series of phone conversations with various counselors, Jacobs was told he could catch up on his work — even though three of the nine weeks of classes had passed. Teachers gave him conflicting information, and because of Axia regulations his enrollment counselor couldn't talk to his teachers and help broker solutions. In fact, no one he talked to seemed to talk to anyone else.

"There's been a lot of lying," Jacobs said. "They do one thing and tell me something else. There's no trusting this college."

Helping Hands in Washington

But certain people have placed a lot of trust in Phoenix. With the aid of onetime lobbyist and former Assistant Secretary of Education Sally Stroup, John Boehner and Representative Howard "Buck" McKeon, Phoenix's online operations have flourished, jumping from 42,756 students online in 2000 to more than 190,317 today.

This couldn't have happened with the "50 percent" rule still in place. As a lobbyist for the University of Phoenix on the Internet Equity and Education Act of 2001, Sally Stroup knew this. She spent $440,000 lobbying to scuttle the rule that year. In June 2001, Phoenix became a participant in the Education Department's Distance Education Demonstration Program, allowing it to skirt the rule.