COLLEGE IS A SCAM: We often hear people call college a
scam. When they say this, they usually mean two things. One,
they think that college is too expensive or two, they don’t think that college teaches enough
relevant skills that are actually applicable to a job or career. But, there’s this one college
called the University of Phoenix that’s not just a scam figuratively or metaphorically,
but literally. Now, for profit diploma mills are nothing new, but usually, their scope and scale
are relatively small. And the people who join these institutions are generally aware of the
shady status of the school. The University of Phoenix, however, wasn’t a shell company
located in American Samoa. Instead, they actually have hundreds of massive locations across the US
including some of the most popular cities like Atlanta, GA; Austin, TX; Las Vegas,
NV; and of course Phoenix, Arizona. They even have their own massive stadium. Seeing all this,
you would think that the institution is very much legitimate, and technically they are. At the peak,
the university straight up had nearly 500,000 students. And the university also had plenty of
distinguished professors to match. Basically everything about the institution checks out
except for the fact that they’re openly for profit. Now, if we’re being honest, basically
every institution is for profit whether they like to acknowledge it or not. If they weren’t,
UT wouldn’t have a $42.3 billion endowment and Harvard wouldn’t have a $50.9 billion endowment.
Also, they wouldn’t be paying football coaches magnitudes more than even their best professors,
but that’s for wholenother video. The point is that while traditional institutions are also very
much motivated by profits, there’s certain lines that they won’t cross simply to protect their
reputation. Given that the University of Phoenix is openly for profit though, they don’t really
have a line. In fact, just recently, the FTC fined the university $50 million for their deceptive
practices which was disbursed to 147,500 of their students. That was in addition to the university
cancelling $141 million worth of student debt. So, here’s the story of the world’s most prolific
for profit institution and the various shady practices that they have leveraged over the years.
HUMBLE ORIGINS: Usually, when we take a
look at the history of shady organizations, we’ll see that they actually had wholesome beginnings,
and the University of Phoenix was no different. The university was established by a man named
John Sperling who had a pretty humble background. John grew up in a tiny house in Missouri and his
parents were farmers who couldn’t make ends meet. So, there was really no expectation for John to
go to college himself. In fact, no one in his entire family had gone to college. Nonetheless,
the cards would fall in a way in which John would not only get a bachelors but a PhD in history
from Berkeley. I don’t think you’d be surprised to hear that he became a professor at San Jose
State University shortly after. By all accounts, John had made it big. He had gone from being a
no name farmer in Missouri to being a respected professor in California. But, John didn’t fit
in all that well with his new crowd. He hated many of his students as he felt that they didn’t
realize how privileged they were. Similarly, he hated many of his peers as he felt that they had
become too comfortable and that they didn’t try to incite change despite having the power to do
so. Let’s just say that the university hated John as well given that he was always a trouble maker.
John was literally the president of the faculty union and he was constantly trying to defy the
administration. Hearing all this, it’s surprising the hear that John stuck around till his 50s,
but he eventually hit his breaking point after a rejection from state administrators. You see,
John had been teaching a class for local teachers and police officers, and what he realized through
this class was that there were plenty of working adults who wanted higher level degrees. So,
John wanted to design a program that targetted working adults, but the state administrators
weren’t exactly big fans of this idea. First of all, the idea was coming from
John who was a known trouble maker. And two, the school already had plenty of students,
so they didn’t really care about attracting more and they would reject the idea. John,
however, felt that this was an example of the institution exercising classism. So,
he would leave his cushy job and start pitching the idea to other universities that were in
desperate need of new students, and unlike San Jose State, these institutions would bite. John
would go onto launch various programs at these institutions that would eventually become known
as IPD. But accreditors weren’t exactly big fans of this idea. You see, IPD programs were designed
to be for profit and had massive margins. But, wait a minute, didn’t John want to help lower
class adults? Well, yes, but the only way that he could get these institutions to not only adopt
this program but to actively care about and grow it was to offer profit incentive. Despite this,
the push back from accreditors consinstly became stronger and stronger, and eventually John would
be pushed the conclusion that the only way he could make this work was by starting his
own institution. He didn’t want to do it in California where the accreditors already hated
him though. So, instead, he moved to Arizona and established the University of Phoenix in 1976.
CORRUPTED BY PROFIT:
The University was by no means a success from day one; in fact, it was very much a failure. During
their first year of classes, the institution only had a total of 8 students. A lot of this
had to do with that fact that the university was unaccredited and had tight stipulations on who
could apply. Some prerequisites stipulated that you had to be at least 23 years old and already
have some work and college experience. But, as the institution gained accreditation and expanded into
more populated areas, they saw greater success and would eventually become profitable. But,
their biggest jump forward didn’t come till 1989 when John began offering online programs. This
made the university a pioneer in online education and if you know anything about the 1990s,
you know that investors very much had a sweet tooth for online products. So,
when the university’s parent company, Apollo Education Group, went public in 1994,
investors ate it up. Investor capital would allow the institution to grow faster than ever
before both physically and virtually. Their programs included business, education, health
science, and social science. And they offered all sorts of degree programs from associates
and bachelors to masters and doctorates. The university would even expand internationally
by opening a campus in Vancouver in 1998. All of this allowed the university to grow their
enrollment to a total of 100,000 students by the end of the century. For perspective,
even the largest public institutions in the US aren’t able to reach such numbers. But, it
wasn't sunshines and rainbows forever. Investors don’t invest in companies just for the fun of it;
they invest to make profits. And investors don’t just want profits, they want growing profits which
was especially true in the early 2000s throughout the dotcom crash. And given that the University
of Phoenix was indeed a public company, one of their legal obligations was to address shareholder
interests. And this is what would set off the painful decline of the University of Phoenix.
SHADY PRACTICES:
The University didn’t just jump into the super shady stuff straight up though. Like most things,
their descent into the darkness was much more gradual starting with much smaller infractions.
For example, in 2000, they started to drift away from instructional hours. As you would guess,
paying a professor to teach a class is obviously not cheap, so the university started to sprinkle
in some group study hours that would be counted as instructional hours. The university would end
up being fined $6 million for this practice, but this was just the beginning. A few years later,
two university recruiters would file a lawsuit against the institution for allegedly predatory
recruiting processes. Allegedly, the university had been paying admission counselors based on
the number of students that they enrolled which is actually a violation of the Higher Education Act.
For obvious reasons, it’s not a good situation when admissions counselors are incentivized to
act for their own benefit instead of the benefit of the potential students. The University never
admitted to any wrongdoing, but they did agree to pay a settlement of $67.5 million. It doesn’t look
like they changed anything after this settlement though as they just became even more aggressive
when it came to recruiting. The university precisely priced their degrees so that the entire
cost of the degree could be handled by government grants and loans. This meant that basically anyone
could afford to attend the school, but that was kind of also the problem: basically anyone could
afford to attend the school. This resulted in a bunch of people who weren’t exactly academically
inclined to join the school. These people had very little chance of actually getting
through the coursework and obtaining the degree meaning that much of the effort that
these students spent at the institution would be a complete waste. Yet, they were pushed by
recruiters to join anyway just so that the institution could earn money from government
grants. One group of people who have access to bunch of government grants is veterans, and yes,
the University of Phoenix would shamelessly target veterans. They would allegedly setup recruiting
booths at military bases and promise the moon and more to these veterans. At one point, the school
would even get banned from recruiting at military bases, but this wasn’t until after the damage had
already been done. During the worst of it, only 5% of students were actually getting a degree which
means that 95% had paid for nothing or worse, they were paying back loans for nothing. Eventually,
the FTC did step in and get the university to partially refund 147,500 students and forgive
some debt, but in the grand scheme of things this was nothing. $191 million spread across 147,500
student works out to a mere $1300 per student on average which is nothing in comparison to
the cost of tuition. So, it looks like the vast majority of students will be left holding the bag.
UNIVERSITY OF PHOENIX TODAY: While the government
wasn’t able to do to a whole lot about the situation, it looks like the media has. As
more and more media outlets cover the institution and all of their shady practices, it appears that
less and less people end up joining. In fact, enrollment has fallen off a cliff from nearly half
a million in 2010 to less than a 100,000 in 2020. This has forced the institution to scale back
substanitally. In fact, the university expects to only have one campus by 2025. They even had
to give up their stadium as well which has since been overtaken by State Farm. Looking forward,
I suspect that this downtrend will only grow stronger. Here’s the thing, even if all the
reasons outlined in this video doesn’t dissuade people from joining, one factor definitely will:
job prospects. Even if the professors, classes, and courses are all stellar at the university,
graduates would still have a tough time finding a job simply due to the terrible reputation of
the university. If you have this institution on your resume, employers will almost definitely
question your judgement and wonder why you joined a for profit instituion. So,
if you’re looking to get a degree, this should probably be one of the top institutions that
you avoid like the plague, but that’s just what I think. Do you think that college in general
is a scam? Comment that down below. Also, drop a like if you hope that the students
get more restitution. And of course, consider checking out our discord community to suggest
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