SUBMITTED: Friday, September 17, 2004
POSTED: Friday, September 17, 2004
From The WBALChannel: Video available at this link:
http://www.thewbalchannel.com/education/3737466/detail.html
Critical Federal Report On Univ. Of Phoenix Leads To $9.8M Fine
For-Profit University Fined For Accepting Unqualified Students, Pressuring Recruiters
POSTED: 6:18 PM EDT September 16, 2004
UPDATED: 7:51 PM EDT September 16, 2004
TIMONIUM, Md. -- The nation's largest for-profit university was fined $9.8 million by federal regulators who concluded it was so focused on boosting enrollment that it pressured recruiters to accept unqualified students.
The fine against the University of Phoenix was the largest ever imposed by the Department of Education.
The federal investigators' 45-page report detailed several examples of compensation and sales practices that the government said were illegal or unethical, according to Tuesday's editions of The Arizona Republic, which obtained the report.
The Department of Education oversees federal financial-aid programs and has strict rules against paying recruiters based on the number of students they enroll. It found the school evaluated recruiters and set salary incentives for them based on how many people they signed up and then tried to hide those practices from the government.
An employee who spoke with WBAL-TV 11 News based on a condition of anonymity believes he works in an illegal environment every day.
The employee's official title is "enrollment counselor." But the employee said a more accurate description would be "get-them-any-way-you-can salesperson."
Because the University of Phoenix accepts federal aid, it cannot pay recruiters based on the number of students they enroll, WBAL-TV 11 News reporter John Sherman reported.
"We're constantly pressured to enroll anyone who can pay, regardless of whether they're ready to handle the courses," the employee said.
About 60 percent of the school's tuition revenue comes from financial aid.
Enrollment counselors interviewed by regulators told of a glassed-in isolation room where under-performing students were put on display to work the phones under intense management supervision, according to the report.
"There's no qualification. If [potential students] have the money, if they have the ability to get financial aid or if they have tuition reimbursement with their company, then those are pretty much the qualifications that we look for -- and most importantly, if they can start now," the employee said.
The employee said that university officials directed recruiters not to worry if students are under-qualified for courses.
"Some people are blown away and are overwhelmed by what's going on, but once they get past the first class, it's not a problem anymore," the employee said.
"Your job is constantly on the line. We're constantly enrolling new classes every month, and their only objective is to get that class filled. We're constantly pressured to call students over and over again to get them into the class," the employee added.
The employee said that recruiters can include in their "start" count students who return for a second class. The employee said their pay is related directly to the number of starts.
"You can potentially receive up to a 20 percent increase on your salary, based off your performance, and performance is basically the number of enrollments," the employee said. "The No. 1 factor in evaluating my job performance is the number of students [I] enroll. That's how we're compensated, that's what our raises are based upon."
The Apollo Group, the publicly traded parent company of the University of Phoenix, had announced last week that it agreed to pay $9.8 million to settle a year-old inquiry by the Department of Education. It did not admit any wrongdoing.
Todd Nelson, Apollo Group chairman and chief executive officer, called the regulators' criticism of the university's recruiting practices "very, very unfair" and inaccurate.
"That's not how we do it," Nelson said.
University officials told 11 News that the criticism is unfair and inaccurate. But the criticism level offered by the employee with whom 11 News spoke matches almost exactly what's contained in the Department of Education report, Sherman said.
The employee told 11 News that, even after the fines, officials told workers, "We're a $14 billion company and it's just a cost of doing business."
"It's been very business as usual, we must go on and 'So what?' " the employee said.
The University of Phoenix, founded in 1976, offers bachelor's, master's and doctoral degrees, focusing on business and management, for working professionals. It has 151 campuses in 30 U.S. states, Puerto Rico and Canada, according to its Web site. As of May, it had 213,000 students, including nearly 110,000 attending its online campus, the Web site said.
The regulators said their report was based on site visits and interviews with more than 60 university employees and former employees. It did not address the school's educational quality.
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