Surprise, surprise: for-profit ‘universities’ put profits before students

Nice LRB piece by Howard Hotson about the background to the private ‘university’ to which David Willetts seems so attached.

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.

In the face of strenuous lobbying from the for-profit university industry, the Obama administration is now reversing the regulatory changes of the Bush years that allowed this bonanza. It has just been revealed that attorney-generals in ten states are investigating the University of Phoenix ‘for possible deceptive practices in its student recruiting and financing’ dating back to 2002. It looks like the party may be over, at least for the Apollo Group. Enrolment at Phoenix dropped by 42 per cent in the last three months of 2010. In January the group conceded that it expects applications to drop by another 40 per cent in the first quarter of 2011.

Is it possible that Willetts just doesn’t know what the Apollo Group was up to at the University of Phoenix? Or does he imagine that for some reason the same thing couldn’t happen here?