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Subprime student loans, take 2

Part two of our series on for-profit universities airs tonight. Based on the reaction to the first piece, I’d say this is a hot topic.

Click here to read or listen to last night’s story by Amy Scott and Sharona Coutts. Our partner ProPublica has also published Sharona’s expanded print version of the series. Here’s a link to my post from yesterday.

The first story generated a lot of comments, including quite a few from University of Phoenix students and employees:

  • “I am a former employee, “Enrollment Counselor” of The University of Phoenix. I would like to express my disgust with the manipulative and exploitative practices in which we were trained.”

  • “All enrollment counselors go over and over and over the finance responsilblity that the student has. If any enrollment counselors lies about anything they would be fired on the spot. Maybe you should check your facts before writing something you have no-clue about.”

  • “As an Enrollment Manager for the University of Phoenix, I am always surprised by the level of intelligence or the lack there of by some students. Students are always told that financial aid is consisted of both loans and grants. Give me a break, why the hell would schooling be free. Stupid, absolutely stupid.”

  • “I am a proud alum of UOPX and I was not pressured into enrolling. I took responsibility to assure the school’s accreditation was up to par and I understood what I was signing upon enrollment. I am thankful for-profit school exist because I cannot attend a traditional university due to my work schedule.”

  • “I teach at a community college and at a private (non-profit) university in Southern California. I have had many students who were survivors of University of Phoenix and similar institutions, stuck with sizable debts and degrees that are despised by the academic and professional world.”

I hope the focus on the University of Phoenix doesn’t muddle the larger issue here. Phoenix is the biggest of the for-profit schools. It gets the most attention and is facing legal battles over the legality of its policies. Not all for-profit schools have the same reputation. There is a place in education for well-run for-profit, online schools. But many of them do have a big problem with student loan defaults. And that, as Sharona points out at ProPublica, is the big picture:

“Students who default on their student loans have their Social Security benefits intercepted, have their tax returns intercepted, have their wages garnished” and “are ineligible for any other federal benefit program until they arrive at a repayment solution,” said Nassirian, of the association that represents college admission officers. “They are ruined for life.”

Taxpayers don’t suffer because, although the public underwrites the system by providing the loans, the program makes money overall, according to Department of Education estimates.

President Obama wants more people to go to college. But previous administrations wanted more people to own a home, too. And look what happened with that. The president would do well to make sure he know what’s happening out there and why.

Catch part 2 of the series tonight on Marketplace.

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Comments (15)

Anonymous | Respond
November 4, 2009 3:55 PM PT

Is anyone else sick of our government subsidizing fraud? Here, it’s most egregious because it allows the fraudsters to prey on our youth, but its apparent throughout our society and economy.

To those who defend the systemic fraud here as a fine price to pay for allowing lower income people opportunity, please point to the people who have benefited from their for-profit degrees, rather than speaking in general terms. Does UOPX provide value? If the degree is worth its price, please provide examples. There seem to be plenty of examples of aggrieved ex-students and disgusted ex-employees.

Mary Ann McGee | Respond
November 5, 2009 6:47 AM PT

As a licensed professional counselor, I take great exception to the common practice of labeling admission recruiters, financial aid staff and for-profit sales people as “counselors”. Counseling is a profession that requires masters’ level training, professional licensure, and on-going professional development. Delivering a sales pitch to potential students, pressuring them to enroll,encouraging them to take on more debt than they can afford—none of this fits into any definition of the ethical practice of counseling. Please don’t refer to these people as “counselors”.

Michael: responding to Mary Ann McGee | Respond
November 5, 2009 1:19 PM PT

Mary, not all counseling positions require licensure. If your proud of your title, that is wonderful, but by no means are you more intelligent than the rest of us.

anon: responding to Mary Ann McGee | Respond
November 5, 2009 8:23 PM PT

The employees who work at such institutions shouldn’t be called “advisors” either. That in itself is a misnomer.

As an employee of one of the for-profit schools I can definitely see the appeal in being able to earn a degree online, while being able to work at the same time or take care of the kids at home. However, I did my studies at a traditional brick and mortar school, and am considering whether to do an online degree myself, but have some serious reservations. Thus, I’m holding off until I find a program that is high quality and know that my CV won’t be tossed in the bin.

I think the problem is that the brick and mortar schools who have regional accreditation in addition to specialized accreditation (e.g CCNE for nursing and AACSB for business, etc) have not been as accomodating to the non-typical student (e.g. the working adult/parent, etc). This makes the online (often for-profit) institutions more marketable - they are offering convenience. The tactics they use to recruit students are questionable, sometimes downright shady, but if more people had done their homework, maybe this would be less of a concern. It is still possible to get an online degree from a reputable NON-PROFIT university - there are some that, if you look hard enough, don’t even have that much of residency requirement. Additionally, there is no distinction on the transcript saying your coursework was all done online.

Josh: responding to anon | Respond
November 6, 2009 8:05 AM PT

University of Phoenix is accredited by the ACBSP which is a prestigous business accreditation.

Mikey | Respond
November 5, 2009 8:39 AM PT

This story is political propaganda by a pro socialist/liberal, and under informed group of individuals. You all should be ashamed of this article that is not journalism, but slander. You do not even have both sides of the story, which true journalism offers. Maybe FOX News should school you all on how to do the news since their ratings are much higher.

Kim Abbas | Respond
November 5, 2009 8:44 AM PT

I typically enjoy listening to Marketplace during my morning and afternoon commute. Obviously, as an enrollment counselor for the University of Phoenix I was extremely interested in the latest series regarding for-profit schools and the problem of student loan defaults. I have to say, I think the journalist working this piece had her mind made up from the beginning and was in no way interested in reporting a fair and balanced story. I don’t have a problem with Marketplace airing a story that explores both sides of the issue but it was obvious that the slant of this story was to undermine the integrity and quality of U o P’s academic programs and business practices. Where were the sound bites from students who loved their experience at U of P? Or the ones who benefited tremendously from earning their degree? Did you talk to any of them regarding THEIR decision to finance their education? I can tell you as an enrollment counselor I have never pressured any student from taking out student loans without understanding the responsibility that comes with it. We have trainings all of the time about responsible borrowing. Also, as enrollment counselors we are trained to support the students in their academic success. We are there for them when they have questions and when they want to share their latest success stories. I am sorry for the students in your story who did not understand what they were doing. It is my hope that U of P and its students will come out of this stronger than ever.

Anonymous: responding to Kim Abbas | Respond
November 5, 2009 1:48 PM PT

I, too, typically enjoy listening to Marketplace. But I am at odds as to why National Public Radio, the often self-proclaimed pillar of objective jounalism, would air such a one-sided story.

As an employee of UOP, I know first-hand that much of what was reported in the story is based on 1. a limited number of accounts that are not representative of the whole, and 2. events that have long-since been resolved.

If UOP was such a bad place to get an education, why would we continue to receive accreditation from the Higher Learning Commission of the North Central Association? This, by the way, is the same agency that accredits the universties where most of us (including your reporters) received our degrees.

If UOP produces degrees that business and industry does not take seriously, then why do many of our graduates have good jobs in a number of successful fields—including executive positions with several Fortune 500 companies?

If UOP is such a bad place to get a degree, then why does the data show that, on several academic indicators, our students perform as well as, if not better, than students who attend traditional universities?

To balance things out, I look forward to hearing stories on public, non-profit universities where college presidents who have finance—not education—degrees are also refered to as CEO’s, where student recruitment has been replaced with “competetive marketing strategy,” where cafeterias have been replaced with food courts, and where the highest paid employee is usually a coach.

Until we see the other side of the story revealed, the reporting shown in this feature has tainted the reputation of NPR. I will unlikely not listen to Marketplace again.

B Monty | Respond
November 5, 2009 9:19 AM PT

I am a student at University of Phoenix. I beleive my education is excellent, in addition to the excellent education, I am able to continue caring for my family and earning a living while getting the education I need to advance in the workplace.

It must be nice for all those people who are critics of U of P to have been able to attend traditional Universities/Colleges, or they must be extremely angry that they did not explore the opportunity for distance learning and had to suffer through a brick-and-morter learning facility to get the same quality of education.

I appreciate good journalism, unfortunately, this is biased journalism. This story did not use a large enough sample size of students or employees and did not follow good jouralism techniques to qualify the pool it interviewed.

Sadly, the work of this author is just more tarnish against the distance learning opportunity which has been proven to be more effective than tradition classroom style alone. Maybe the author should also have reviewed the studies by the Dept. of Education and included those statistics.

Very disappointing.

j | Respond
November 5, 2009 11:00 AM PT

I was a student of U of P, For 1 year as a full time student. Talking to employers I got the feeling that the reputation of U of P’s degree wasn’t taken to seriously for the type of salary I was trying to reach so I transferred out, although there are some classes that can be put in equal quality, for the most part, (I say 80%) my “brick-and-morter” school has a way higher quality of education then U of P. I realize now why reputation of the school is important. Those who say it’s the same quality are full of themselves.

m.w. | Respond
November 5, 2009 11:28 AM PT

Hi Scott,

Fear of change, and naiveté! That is what it is. People working in or for traditional universities are terrified of change in the paradigm of delivery of education and learning in the wake of the information revolution, just as horse owners were afraid of the motor engine, which gave rise to the motor vehicles and trains in the wake of industrial revolution. Their anxiety is understandable. This anxiety however did not mean that the change did not happen because they were afraid. Motor vehicles came, transformed the way humans moved, and transported their effects. The advent of the engine completely changed the way people did things, much to the chagrin of horse owners. It spurred a completely new economy that was intrinsic to mechanization, and nothing to do with the practices of the past of owning horses. The use of term horsepower in vehicles today has nothing to do with having a horse.

In the same way, the traditionalists of education can kick, scream, and shout as much as they want about changes taking place in education delivery, but the information technology revolution is here. The University of Phoenix is burning the trail of new possibility of delivery of education and learning which is in perfect alignment with the information technology revolution. UoP is so successful because its strategies for delivery of education is so neatly aligned with the information age. To kick and scream against a change whose time has come, as the people at ProPublica did in this article is plainly naive.

ProPublicans and such people who reject an obvious reality are like the horse owners refused the reality of the motor engine. They can bury their heads in the sand as much as they want. The truth is humans know exactly what they need to do, and do not rely on smear press to decide where to go for a service that is so aligned to their needs.

Students choose the University because of the quality of education that is in perfect alignment to their needs in the information age. To have a 440,000 student population means that the University is doing something right, That is a major endorsement in you ask anyone.

I would not worry about a few people who are too thick to comprehend that the game of education has completely changed, and we are not going back to archaic exclusionary educational paradigms that denied access to education to brilliant people around the world. People at ProPublica, wake up to the present, and stop spreading fear, because of your own ignorance.

Liz Phimma | Respond
November 6, 2009 8:02 AM PT

I am a graduate of UOP, and there is no way the enrollment counselor pressure me to attend this University. Not only have I gotten the education I needed, but the relationships with my classmates, peers, collegues, and friends that I can carry with me always.

The curriculum at UOP is very difficult and they expect much more than the traditional university. Don’t try to bring down UOP or the degree until you yourself has gone through the program.

Everyone at UOP has been very supportive, especially the facilitators, in helping the students make a difference in our own lives.

redbud | Respond
November 6, 2009 9:07 AM PT

As a long-time faculty member in a prestigious brick & mortar as well as UoP, I can assure you that the course materials at UoP are excellent.

Debra Wheaton | Respond
November 6, 2009 10:18 AM PT

I worked hard for my degree! It took many study hours, tears, frustration and determination to make it through the program. I attended the brick & mortar university in my town and was FORCED to take 12 hours just to receive financial aid.
I had a job and worked 40/50 hours per week and I could not keep up with the course loads. I talked to my counselor twice and was told there that I would lose financial aid if I dropped any classes. Needless to say, I was overloaded and failed 3 classes and passed 1. My counselor never called or sent an email to find out what happened to me.
I immediately signed up with UOP and never looked back. Online classes afforded me the opportunity to work from home and have more time with my active teen-ager. Land college kept me out of the house an additional 12-15 hours; plus the hours that I worked on my job. I had professors that did not care in land college, whereas UOP professors are personally involved thereby responding quicker.
Don’t get me wrong, UOP was hard-very hard, but I liked the freedom of doing class work at 5am because I had to attend a school function for my daughter the night before. I enjoyed my educational experience at UOP. ProPublica needs to lighten up and stop knocking this school. A person has to choose the school that is best for their situation. For some the land college will work better, for others online colleges are better. Either way the person gets a quality education which opens the door for better job opportunities.

Brian Stephens | Respond
November 6, 2009 11:03 AM PT

This article is very biased against UOP. It does mention that other schools have other problems and does not name any of the other schools. It is a hit piece on UOP.

I met UOP at a job fair in Concord for the MBA program. They were looking for teachers, but encouraged me to enroll. Unlike the article, I was not rushed into anything and I was told new classes start every week. Unlike the students mentioned in the article, I read everything I signed and was certainly aware of the risks I was taking in applying for student loans. Read before you sign. It is my responsibility to read, not the University’s.

The article almost seems to imply that UOP has a responsibility to graduate its students once they take loans. Not so. The loan is how you pay for the classes UOP provides. It is the student’s responsibility to do the reading, take notes, resolve problems with teachers and groups and get things done on time. Class is open 24 hours each day. Post something to the discussion board whether you read the material or not and get the credit for attendance and participation.

Dropout rates are always high at every school. I attended DeVry for my Bachelor’s in Accounting. In March, 1992, I started in a class of 120 students my freshman year. About 60 of those were Accounting students. The rest were BSOPs majors. Three years later (we went to school all year), I was one of four who jumped up on that stage and got my diploma. Eight people were added to our number and these eight were student who fell back or did the night school part-time.

At UOP, 11 people attended my first class. About 21 months later, I was one of two people to graduate. The two of us merged with other classes who took some weeks off for us to catch up with them, but we made it. Only determined, self-motivated students will graduate. I took three years for my Bachelor’s. DeVry had a tough accounting program. But I succeeded because one night I accpted responsibility for my poor study habits and took the initiative by starting the Principles I course from Chapter 1 one night when my grades looked about mid-trimester like I may not pass this course. That one night, reading from Chapter 1 and drawing a map, pulled my grade from a low D to an A- (90.05) by the end of the course. After that night, Accounting made perfect sense and I knew I picked the right major. The 14 accounting courses after that were easy.

My sister, on the other hand, aced her SATs and was high school salutatorian, but took five years to graduate through three colleges. She could not pick a major she liked and finally made her own degree, a hybrid of Communications based on the classes she had taken so far.

Dropout rates are high at every school. I am certain Stanford and Harvard do not graduate most of the students who enroll there either. Studying requires commitment, even if you are only taking one class at a time for six weeks! The dropout problem is universal.

Any large organization will have bad apples. UOP should use the opportunity to tighten its recruiting policies and police its recruiters regularly. But the problems mentioned in the article do not match the university I attended. ProPublica clearly has a grudge against the University of Phoenix. Perhaps a disgruntled dropout wrote the article who did not bother to read his student loan agreements before signing them. I saw a lot of my classmates leave because they would not make a commitment to the group and their studies. Some took off in the middle of the class to spend a week in Vegas (too cool for school) and expected the classwork to write itself. When they did not post anything online for two weeks they were automatically dropped per the agreement we all signed. The author and those former students mentioned in the article sound like one of these dropouts who refused to do the work and take no responsibility for their actions.

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