February 12, 2016

A New U. of Phoenix? Or Just New TV Ads?


On Monday, the University of Phoenix’s owner, Apollo Education Group, announced a $1.1 billion deal to be acquired by a group of investors including Apollo Global Management (no relation) and the Vistria Group, a private equity firm that includes Tony Miller, who was Deputy Secretary of Education under President Obama from 2009-2013. Miller would become Chairman of the Apollo Education Group Board.

The University of Phoenix, by far the largest for-profit college, has seen a dramatic decline in enrollments and revenues in recent years, as the public has become aware of abuses and poor performance at the school and in its sector. But Monday’s press release quotes Miller as promising change: “For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance. This doesn’t need to be the case.” Miller pledges, “We are committed to accelerating and enhancing efforts to establish University of Phoenix as the leading provider of quality higher education for working adults and to continue supporting the organization’s commitment to operating in a manner consistent with the highest ethical standards.”

Is the University of Phoenix turning over a new leaf?

Judging by developments so far, that’s not clear at all.  The company’s long-time CEO is staying on, and after the lead acquiring private equity company, Apollo, recruited Vistria to join the consortium, it was noted that Vistria is headed by Marty Nesbitt, President Obama’s close friend, and a source explained to Reuters, “Bringing in Vistria was a strategic decision … as the buyout firm hopes to smooth relations with government regulators once a deal is completed.”

And now, this. The University of Phoenix has been the #1 school in America — at advertising. It has spent as much as $100 million a year on advertising.  It is the only college that owns the naming rights at an NFL stadium.  For years it was the largest advertiser on Google. A 2012 Senate report found that the University of Phoenix spent $2,225 per student on marketing in 2009, compared to $892 per student on instruction. Viewers tuning in for last fall’s premiere of CBS’s “The Late Show with Stephen Colbert” quickly were shown a University of Phoenix commercial.

This afternoon, Advertising Age breathlessly reports on a new activity by the University of Phoenix:

University of Phoenix aims to turn around the public perception of the for-profit online school as a “diploma mill” with its latest campaign, “We Rise.”

Created by 180LA, the campaign is the school’s first creative effort since January 2015 and highlights the pride of its current students and alumni, who are typically working adults with families. The campaign shifts UOP’s focus from enrollment to retention.

“We wanted to show the determination of a typical student who wants to get a degree while working and taking care of his or her family,” said Chris Mendola, 180LA’s founder and chairman.

“Our alumni are fiercely proud of their degrees and what they accomplished,” added Joan Blackwood, the university’s chief marketing officer.


The main TV spot features several scenes inspired by students’ real stories — working mothers, farmers, army veterans, waitresses juggling books and assignments on break, as a version of the “Wizard of Oz” tune “If I Only Had a Brain” provides the soundtrack, demonstrating the hardships the students face to get their degrees and calling out to employers: “You’re going to want someone like me, but only if you have a brain.”

Other pieces of the campaign, which includes out-of-home and print, are social videos that show successful alumni debunking claims from social media that the school “gives you a degree and a higher GPA… all you’ve gotta do is show up.”

You can watch the new TV spots here — stirring music, a rainbow of people striving and dreaming:

Change doesn’t mean spending millions to create and air emotional ads selling the public on the idea that you’ve changed.  Change means actually changing.

Taxpayers have been giving Apollo Education as much as $3.8 billion dollars a year in federal student aid, more than 80 percent of the company’s total revenue; even after the recent sharp declines, that amount, combining aid from the Department of Education, the Pentagon, and the VA, exceeded $2 billion last year.

Department of Education data has shown that the University of Phoenix’s graduation rate for first-time, full-time students is about 16 percent, and that graduation rate for the school’s online programs is about 4 percent. (As a PR flack who reached out this week stressed to me, Phoenix prefers to calculate its graduation rates their own way.) Around 25 percent of University of Phoenix students default on their loans within three years of leaving school.

After an investigative reporter highlighted troubling, potentially unlawful recruiting tactics by the school directed at U.S. military service members, the Defense Department temporarily kicked the school’s recruiters off bases and suspended its student aid to the school, until home state senator and Armed Services Committee chairman John McCain intervened. But the Pentagon is keeping the school under heightened scrutiny. The University of Phoenix also has been under investigation in recent years by at least four state attorneys general, the Federal Trade Commission, the Securities and Exchange Commission, and the Department of Education for alleged deceptive practices.

The FTC, in particular, is, according to a University of Phoenix filing with the FTC, looking into whether the company engaged in “deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing, or sale of secondary or postsecondary educational products.”

Barmak Nassirian, director of federal policy analysis at the American Association of State Colleges and Universities, expressed concern to the New York Times about how the new operators of the University of Phoenix might be tempted to restore the company’s profitability by revving up its old predatory ways: “In Mr. Nassirian’s view, putting the company ‘back on steroids’ would require the kind of ‘overpromising and under-delivering’ that got the educational company in trouble in the first place.”

This article also appears on Huffington Post.