Wednesday, July 1, 2015

The Falling Fortunes of Apollo Education Group (University of Phoenix)

Posted By on Wed, Jul 1, 2015 at 3:47 PM

A layoff of 600 workers isn't good news, usually. But if, say, they're working the phones to scam people out of their money, it's not such a bad thing when they lose their jobs. That's a big part of the story behind the layoffs at the Phoenix-based Apollo Education Group, the parent company of the University of Phoenix.

The Republic has an article about the layoffs that's full of facts and figures—drops in enrollment, revenue, and stock prices (the graphic at the top of the post shows the stock values for the past eight months)—but it misses the real story. There's a hint of what's going on when the story mentions who lost their jobs. It was mostly enrollment counselors, the people who call prospective students and try to talk them into signing up. The high pressure sales pitches, often filled with lies, got University of Phoenix and lots of other for profit colleges into trouble over the years. They conned students into enrolling in programs which often had little merit, and even when the coursework was potentially valuable, all too often the people who were talked into enrolling lacked the basic skills needed to benefit. As a result, students pile up costly loans they can't pay back. And when they default, it's usually the taxpayer who's stuck with the bill. University of Phoenix gets almost 90 percent of its revenue from U.S. student grants and loans, and it gets its money whether or not the students pay back the loans.

An AP story, Why the gov't let many trade schools become diploma mills, does the subject more justice.

It explains that these huge, publicly traded, so-called job training institutions didn't even exist until after 1990 (the story doesn't mention that Bill Clinton had a hand in beginning the growth of the system [and later became an Honorary Chancellor of one of the institutions]), but their exponential growth didn't begin until the George W. Bush presidency.
Several consumer advocates interviewed by The Associated Press point to 2002 as the beginning of a dangerous rise of for-profit colleges. That's when an Education Department memo written under President George W. Bush suggested colleges wouldn't be severely penalized if they compensated college recruiters for getting students in the door. The memo became a tacit endorsement for the kinds of high-pressured sales tactics that emerged.
In other words, recruiting regulations were loosened, and the absolutely predictable profiteering and misuse of government funds began in earnest. Don't believe for a minute this is an example of unintended consequences of government programs. ALEC wrote draft legislation supporting the colleges, and lobbyists swarmed the halls of Congress softening up elected officials. Attempts at reform were blocked again and again by Republican members of Congress. This was a money making scheme bought and paid for by the for-profit college industry and its friends.

I remember hearing the line pushed by apologists for the colleges when it was obvious to anyone who was paying attention that students were getting hurt and the government was getting fleeced. The people who wanted to close the schools' loopholes hate the poor, the colleges' backers said. Oh sure, it's fine with them when wealthy kids want to better themselves by going to fancy colleges, but they don't want to poor to have the same opportunities. That couldn't be further from the truth, of course. The poor students were being bilked, then burdened with debts they couldn't hope to pay. But when you're a conservative protecting corporate interests, it never hurts to pretend you're a champion of the poor.

If you hear corporations and conservatives say they're only looking out for poor folks, watch out. When people wanted to rein in the subprime lending that helped bring down the economy in 2008, for instance, supporters of the lending industry that was making out like bandits said the people who wanted to tighten lending regulations just wanted to rob low income people of the right to buy into the American Dream by purchasing a home. Whenever anyone wants to raise cigarette taxes, we're reminded by supporters of Big Tobacco that low income people smoke at a high rate, so it's an unfair tax on the poor. School vouchers? "Education reformers" say they love vouchers because they give poor children an opportunity to escape bad "government" schools. The cause of the day changes, but the story stays the same.

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