UK's newest private uni: parent spends 25% of turnover on marketing, recklessly misled investors

[muriel_volestrangler]

The "BPP University College of Professional Studies" was given university status by David Willetts last year, and its owner is the Apollo Group, which also owns the University of Phoenix.

The money that would once have been reserved for academic salaries is spent on marketing, which eats up as much as 25 per cent of expenditure: the Apollo Group spent $1 billion on marketing and student recruitment in 2010. Education is neither here nor there: if that is the fastest way to generate profit then no one will worry if a quarter of the funds are drained away from teaching. Phoenix’s aggressive advertising campaigns make sweeping claims for the quality of its courses and the value of its degrees. Telephone marketers, paid not by the hour but by the signed application, are instructed to prey on people’s fears of being left behind by a fast-changing economy. New recruits are to be lured in as quickly as possible – to this end, courses start at the beginning of every month. The crucial thing is to get the funding moving from federal coffers to the student’s debt ledger, through the university, and into the pockets of shareholders and chief executives. The three top executives at the Apollo Group each took home more than $6 million in 2008; the founder of the University of Phoenix, John Sperling, is a billionaire.

By the time students realise that they’ve made a terrible mistake, there is often no way for them to back out and no one to help on the other end of the phone; there’s nothing for it but to press ahead and try to recoup some return on their investment by finishing the course. But very few students do complete their degrees: according to government statistics, the six-year completion rate at Phoenix is 9 per cent. Those who do finish end up with debts twice those of graduates from ‘non-profit’ private universities and three times those of graduates from public ones. And the degrees they have acquired at such inflated prices often turn out to be worthless. Three former students interviewed for the PBS documentary College Inc., first broadcast in May last year, were handed nursing diplomas without having set foot in a hospital. A student talked into studying for a doctorate in psychology discovered when it was time to ‘graduate’ that her cybercollege only ‘aspired’ to the accreditation needed to award degrees of this kind.

In 2004, a scathing report issued by the US Department of Education concluded that Phoenix, as the Chronicle of Higher Education put it, had a ‘high-pressure sales culture’ that intimidated recruiters who failed to meet targets and encouraged the enrolment of unqualified students – in short that it rewarded ‘the recruiters who put the most “asses in classes”’. Apollo illegally withheld the report, but it was leaked and the group’s value on the stock market crashed. A suit was brought alleging that its management had ‘disseminated materially false and misleading financial statements in an effort to inflate its stock price and attract investors’.

In 2006 the company’s controller and chief accounting officer resigned amid allegations that the books had been cooked; in 2007, the Nasdaq Listing and Hearing Review Council threatened to withdraw Apollo’s listing from the stock exchange; in 2008, a US federal jury in Arizona found Apollo guilty of ‘knowingly and recklessly’ misleading investors, and instructed the group to pay shareholders some $280 million in reparations. Apollo appealed, but the appeal was rejected by the US Supreme Court on 8 March this year.

http://www.lrb.co.uk/v33/n11/howard-hotson/short-cuts

Just the kind of people you want to entrust education to, huh? Plus the students will get the £6000/year loans, which, unless they actually end up with a well-paying job (and a 9% completion rate doesn't bode well for that), are not paid back in full, but the university got the money at once; so they are subsidised by the taxpayer, as well as costing the markstudent a lot. No wonder a consultant says "England and Wales have just become Treasure Island to for-profit companies … UK students are in the business plans and sales targets of both domestic and international for-profits."