Reporting on the connections between education and work

Remember Phoenix?

The University of Phoenix, once the largest university in the country, has shrunk dramatically. Its story isn’t just one of attrition, though—but also of getting back to its roots as a bachelor’s completion institution for career-minded adults.
(NASA/Unsplash)

The University of Phoenix was the largest university in the country for a dozen years. And not just kind of large—at its peak of more than 470,000 students in 2010, Phoenix dwarfed the next largest institution.

Today, its enrollment sits at less than one-fifth what it once was.

Over the past four years, the university has cut its program offerings even more dramatically, from about 1,700 to 170.

Some of that simply has to do with size and physical reach. Despite being a primarily online institution, the university had more than 200 locations across the country at its peak. The bachelor’s in education from Phoenix, for example, was offered in 43 states, each with its own requirements and unique needs.

The big idea: But the past four years at Phoenix aren’t a simple story of attrition. The university has been intentionally pruning its catalog—getting back to its roots as a bachelor’s completion institution for career-focused adults. The overall goal is less complexity and a clearer focus.

“We recognized that our strength was actually more about college completion than it was about people who had no college experience,” said Peter Cohen, the university’s president.

The result is not only a more streamlined university, but thus far, one that is seeing improved outcomes. Phoenix’s official retention rate—which covers first-time, full-time students in bachelor’s programs—has climbed from just shy of 27 percent in 2017 to above 41 percent last year. The university’s internal rate, which covers the much larger group of transfers and part-time students, has similarly improved.

Phoenix’s current programs, including its high-enrollment bachelor’s in business administration, had a strong ROI for graduates in a recent analysis of federal data done by Third Way. That’s welcome news for the university, said John Woods, provost and chief academic officer at Phoenix since early 2018, because its students’ number one goal is “a better job than they come to us with.”

Phoenix students are looking for stability and reasonable wage gains. In that way, their ambitions look a lot like those of the current University of Phoenix.

“We are now focused 100 percent on careers,” Cohen said. And for the university, “our goal is modest growth.”

Stepping back: Amid a global pandemic, a vastly different regulatory environment, and a sustained decline in college enrollment—Phoenix’s meteoric rise and fall feels both unique and anachronistic. We may never see its likes again. That’s likely the case even as nonprofits like Southern New Hampshire University and Western Governors University, and publics like Arizona State University reach mega-university status.

The sea change is underlined by the fact that Phoenix is likely to be sold to a nonprofit university in the coming months. And overall enrollment in the national for-profit sector continues to fall.

So, on the cusp of what looks to be a new phase, we checked in on an institution that has so dominated the popular imagination. What is the University of Phoenix now?

Back to the future

At its height, the University of Phoenix paid for naming rights to the municipal sports arena in Glendale, Ariz., that was home to the Arizona Cardinals. (Ken Lund/Wikicommons)

You can’t talk about what the University of Phoenix is without addressing what it was. Founded in 1976 as an institution for adults looking to complete their degrees, the institution was an early innovator—perhaps the early innovator—in online education.

It took off from there. The university’s holding company went public and the institution rode the wave of national, online education it built throughout the aughts—before crashing on the insatiable expectations of Wall Street, and the consumer protection lawsuits and regulations that ensued.

During the Obama administration, it felt like a week didn’t go by without a headline about the growth and perils of for-profit education, and the University of Phoenix was often the poster child. In 2019 the university agreed to pay $191 million in settlement related to a Federal Trade Commission investigation into years-old false advertising claims regarding connections to employers. The university did not admit fault.

“It was the key innovator that made possible in many ways the transformation of higher education,” said Jorge Klor de Alva, president of Nexus Research and Policy Center, who was president of the university from 1998 to 2003.

Yet much of the scrutiny that plagued Phoenix after the Great Recession was warranted, Klor de Alva said. “It takes an enormous amount of effort to keep up with that explosive growth.”

People have written entire books about this period in for-profit education, and debate about the incentives in and regulation of the sector is still very much alive. For example, Congress is considering an expansion of the Pell Grant program that wouldn’t allow students attending for-profit institutions to access the new money.

But this isn’t a story about the role of for-profit education in the United States. Rather, it’s a look at the University of Phoenix today.

What now?

In short: The university is a lot different than it was a decade or even five years ago.

No longer publicly traded, the university is owned by Apollo Global Management, a private equity firm. It enrolled about 84,000 degree-seeking students in the 2020 academic year.

Phoenix has eliminated hundreds of programs at all degree levels, with a focus on those with poor outcomes. It also cut some programs, in fields like education, that were successful by many measures but often led to low-paying jobs that wouldn’t have met the gainful employment standards that the Trump administration scrapped.

“For three to four years, we’ve been pruning our catalog,” Woods, the provost, said. The institution adds programs selectively these days, and only if leaders are confident they’ll help students land careers that pay what federal data show are above-average wages.

Some of its recent program additions have been certificates in tech fields—Phoenix has added 12 new IT credentials over the last 18 months. Currently, business and IT programs comprise about 55 percent of the university’s offerings, Cohen said. Programs in healthcare, education, and social sciences each account for about 15 percent.

“They’ve made a massive transition that took many years,” said Phil Hill, an ed-tech consultant and industry analyst. “They seem to have a clean operation—a realistic approach.”

Perhaps most notably, the university has all but stopped offering associate degrees. It folded its Axia College, a two-year institution focused on younger adults, in 2011. And over the past four years, it has eliminated most of its remaining associate programs. The handful it still offers are mostly in IT.

Axia had been an important part of Phoenix’s expansion plans starting in the mid-2000s, but the associate programs targeted students who were less prepared and less successful than adults who transferred in. As the university’s new leaders mapped the way forward, they decided those programs needed to go.

“We’ve formed relationships with community colleges rather than being the enemy of community colleges,” Cohen said.

As part of its redoubled focus on transfer students, the university in recent years has inked 3+1 agreements with 10 large community colleges and systems. That particular transfer program is designed for students in workforce-oriented majors, and allows students to bring in up to 87 credits and finish a defined set of bachelor’s degrees in 14 months.

“The number one thing we know about student progression and graduation rates, the more credits they come in with, the more likely they are to complete,” said Woods.

On the ground: In the Houston Community College system, the 3+1 transfer option is popular with students who are looking to layer a management degree on top of career-specific training, like accounting, nursing, or trades like welding and plumbing.

Mark Tengler, director of instructional quality at the Houston system, said that Phoenix was the first university to take students in workforce programs seriously as transfer candidates. “For years, universities would ignore those students,” Tengler said, or tell them they had to start over in pursuing a bachelor’s.

But, he said, HCC’s students often were shocked by the costs when they actually started at Phoenix—and they dropped out in high numbers.

It’s different now, Tengler said. The institution has new competition from nonprofit universities that see the potential of adult students, and he said Phoenix is more focused on keeping students.

“Before it was recruit, recruit, recruit,” he said. “Now, they’re much more focused on success and being clear about what to expect.”

Phoenix also charges less than it once did. With the 3+1 agreement, a bachelor’s can be completed for about $12,000. That’s still about $3,000 more than public universities like the University of Houston Downtown, which now offers a bachelor’s completion degree for workforce transfers.

Most students who choose Phoenix now are tapping employer tuition benefits, Tengler said.

The university has ramped up its long-term focus on employer relationships, said Cohen, investing in account managers to build partnerships with companies. And most students who receive tuition benefits from their employer can complete degree programs at Phoenix without taking on debt.

Likewise, Cohen said the university has spent heavily on academic and career counselors. It also has worked for years to define its academic programs in terms of skills, and now offers badges for skills and competencies through Credly, a digital badging platform.

“We are doing that across all of our courses,” he said.

Reputations in higher education—both bad and good ones—take a long time to develop,, said Paul LeBlanc, president of Southern New Hampshire University. However, he praised Cohen as a “disciplined, thoughtful leader who has done a lot to reinvent the university.”

The results

The university’s official retention rate, as defined by the federal government, has been climbing and reached 41 percent last year. And its own calculations—which include the much larger group of students who transferred in or are attending part-time—have gone up 10 percentage points since 2017, to 72 percent.

Graduation rates have not seen similar improvement—the official rate sits at 12 percent—but that’s not surprising given the lag time involved. The current federal rate is for students who started during the 2013-14 academic year. It’s a measure of what the university was, more than what it has become.

The university-calculated graduation rate for that year, again for a more complete cohort of students, is 40 percent for those in bachelor’s programs. The average student at Phoenix today is 37 years old and employed. Two out of three have children or other dependents. They’re career-oriented and juggling a lot.

Time will tell whether the recent increase in retention ultimately translates to an increase in graduation rates.

When they do graduate, though, many students see a strong ROI. Bachelor’s degrees from some of Phoenix’s largest programs—business administration, accounting, criminal justice, and nursing—all pay off in under five years, according to an analysis of federal data by Third Way, a center-left think tank.

Students in business, for example, had median earnings of $48,220 two years after graduation, or $24,020 more than the typical high school graduate, the analysis found. That was enough to recoup the total net price of $60,513 in 2.5 years. And that’s for students who paid tuition at Phoenix for four years, which transfer students do not.

Importantly, the data were for graduates in 2017-18. The one Phoenix program in the analysis that provided no return, an associate for teachers’ aides, is no longer offered.

But no doubt, the university’s years of headlong growth and aggressive marketing still dog it.

David Bergeron for many years was a career staffer at the U.S. Department of Education. A critic of for-profits, he later was a senior fellow at the Center for American Progress. Bergeron said he’s surprised Phoenix has persisted as long as it has, given the hits to its brand.

“The tarnish built up to the point where you don’t see the silver anymore,” said Bergeron.

Even so, today’s Phoenix has much to offer, Bergeron said, including technology like predictive analytics and close relationships with employers.

“They have a set of tools that they’ve built that are remarkable,” he said.

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