The University of Phoenix, the largest for-profit university in the United States, has lost a few hundred thousand students in the last five years, according to its parent company.
The University of Phoenix, which started in 1976 in the Phoenix area, delivers education largely online but also has brick-and-mortar classrooms. In recent years it has been forced to close some of its classrooms and has faced competition from traditional universities that have started their own online courses.
The school receives nearly 85 percent of its funds from federally funded student-loan programs, according to its filings with the U.S. Securities and Exchange Commission. That is just under the 90 percent cutoff established in a federal rule that bars for-profit schools from getting federal dollars if more than 90 percent of revenues come from these student financial aid programs. The rule, however, “excludes tuition assistance from the GI Bill for veterans and from the Department of Defense, which funds education for active-duty military,” according to a report in the Daily Beast, which says that efforts to change this died in Congress late last year.
The University of Phoenix has spent huge amounts of money on advertising over the years, notably with its “I Have a Phoenix” ads, which spotlighted graduates of the school who have important jobs. According to this article in Advertising Age, the school was spending at least $100 million annually on advertising as of 2009.
The environment for for-profit online schools has been difficult in recent years, with Corinthian Colleges, an Apollo competitor, running into major trouble last year year after it was found to have used deceptive marketing to draw students into taking out loans they could not pay back and the Obama administration blocked it from getting federal student financial aid. Just as it looked like it was going to close, a deal was made late last year to turn the for-profit campuses into nonprofit schools, according to this Washington Post story.
The for-profit higher education sector remains challenged, with questions about its quality and its ability to compete with better-known nonprofit schools increasing their online offerings.
Apollo CEO Greg Cappelli said in a statement:
While we faced challenges in the second quarter, we believe Apollo Education Group has the right long-term strategy in place. In a time of unprecedented change in the higher education industry, we are focused on enhancing outcomes through a deep understanding of student and employer needs. This includes differentiating University of Phoenix through its program-based colleges and diversifying our organization with the expansion of Apollo Global and other targeted growth initiatives. We are aligning education to careers, offering students tangible skills and helping employers develop a high-performance workforce.