Billionaire Behind Trump Pressure Campaign on Colleges Owns Predatory University of Phoenix
Private equity billionaire Marc Rowan was revealed last week to be the driving force behind a Trump administration campaign pressuring nine major U.S. universities, including Brown, MIT, and the University of Virginia, to accept a “compact” loaded with right-wing priorities. Rowan, CEO of giant Apollo Global Management, responded with a New York Times op-ed today accepting credit for the initiative, which ties continued federal funding to schools accepting commitments that include: prohibiting affirmative action and requiring standardized testing in admissions; protecting “conservative ideas” while also accepting “that academic freedom is not absolute”; limiting campus protests; rejecting transgender identity; and capping admission of international students.
There is also, notably, a section of the compact entitled “Financial Responsibility” which declares, “Too many young adults have become saddled with life-altering debt that has affected, among other things, their ability to have a family or purchase a home.” The compact adds, “Further, universities poorly equip students when they fail to inform them about likely life earnings for students’ chosen majors or admit students without the skills or support needed to succeed. Universities shall publicly post statistics about average earnings from graduates in each academic program and shall refund tuition to students who drop out during the first academic term of their undergraduate studies.”
Rowan’s op-ed today amplifies this concern: “The evidence is overwhelming: outrageous costs and prolonged indebtedness for students; poor outcomes, with too many students left unable to find meaningful work after graduating…”
On this I agree with Rowan, but I cannot agree that Rowan has any standing to make the point. Because for eight years Apollo Global Management, which Rowan co-founded in 1990, has owned the for-profit University of Phoenix, a school with a record of deceiving, over-charging, and under-educating students, leaving graduates and drop-outs alike with overwhelming debt.
The University of Phoenix has received tens of billions from federal taxpayers for student grants and loans, at times more than $2 billion in a single year. It reported $950 million in income last year — 88 percent of that from federal taxpayers. But the school has posted abysmal graduation rates — currently listed by the U.S. Department of Education as just 25 percent and for many years, and many programs, far worse than that. Only 10 percent of former Phoenix students are listed as having paid off their student loans or even making progress in doing so.
To sign up students for programs with such terrible outcomes, Phoenix has lied to them. The school has faced numerous law enforcement investigations and actions for its deceptive recruiting of veterans, military service members, and other students across the country.
Most notably, in 2019, Phoenix reached a record $191 million settlement with the Federal Trade Commission, which claimed the school had lured students with false claims about partnerships with major employers. Phoenix ran ads falsely indicating that the school had deals with companies including AT&T, Yahoo!, Microsoft, Twitter, and the American Red Cross to create job opportunities for its students and tailor school programs for such jobs, when that was not the case. The deceptive claim went to the heart of prospective students’ motivations for enrolling. Andrew Smith, then the Director of the FTC’s Bureau of Consumer Protection, said at the time of the agreement, “Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist.”
Undaunted, in 2022-23, Phoenix ran another deceptive ad campaign, falsely implying that it was a public state university.
Last year California’s attorney general reached a settlement with Phoenix to resolve allegations that the school’s aggressive recruitment tactics directed at military students violated consumer protection laws.
In 2o22, Phoenix chose as its new president George Burnett, who previously ran another school, Westwood College, that was shut down for pervasive, egregious fraudulent conduct. Burnett resigned five months later, after the U.S. Department of Education questioned Burnett’s record.
With Burnett gone, Phoenix named as its new president Chris Lynne, formerly the company’s CFO. From 2003 to 2010, Lynne was a senior executive of Education Management Corporation (EDMC), another of the biggest for-profit college operations. EDMC collapsed after in 2015 it settled, for about $200 million, major fraud investigations pursued by both the U.S. Department of Justice and more than a dozen state attorneys general, brought over alleged deceptive practices and other illegal conduct that extended back into Lynne’s tenure at the company. At that time of the settlements, U.S. Attorney General Loretta Lynch called EDMC “a high pressure recruitment mill.”
So when Rowan solemnly intones that it’s time for him and his allies in the Trump administration to start protecting students against “outrageous costs”; “prolonged indebtedness”; and “poor outcomes,” it’s really disgraceful.
Apollo and another firm, the Vistria Group, acquired Phoenix’s then-publicly traded parent company, Apollo Education Group, for $1.1 billion dollars in 2017.
During the Biden administration, when the government was working to make it harder to make money off of predatory college abuses, Apollo tried to unload Phoenix to some gullible state university presidents, in Arkansas and Idaho, only to have those deals derailed by opposition in each state.
This week, Apollo and Vistria raised $136 million selling shares of Phoenix’s parent in a new initial public offering for the company, now valued at $1.36 billion.