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Spokane, Washington  Est. May 19, 1883
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College-funding battle lines drawn

University of Phoenix student Lynn Nolen, right, talks with her classmates Thursday before an MBA economics discussion. 
 (Christopher Anderson/ / The Spokesman-Review)
University of Phoenix student Lynn Nolen, right, talks with her classmates Thursday before an MBA economics discussion. (Christopher Anderson/ / The Spokesman-Review)

Spokane’s newest university isn’t much like the others.

The average age of students is 34. Its library exists only online – no bricks and mortar, no shushing librarian. And it’s got a bottom line.

The University of Phoenix, which opened a Spokane branch two years ago, is one of the biggest players in the booming for-profit higher education industry. The school’s parent company, Apollo Group, has seen enrollments in its programs expand rapidly to almost 300,000 this year. Over the last four years, its profits have nearly quadrupled to a net profit of more than $277 million in 2004.

“It’s been a very successful format for almost 30 years now,” said Paul Green, director of Phoenix’s Spokane campus.

The growth isn’t limited to one school. The Chronicle of Higher Education reported in 2003 that the seven biggest for-profit schools had grown faster than higher education overall for six straight years.

Now there’s a proposal in Congress to open the door for such schools to compete for more federal funding.

Proponents say the change – placing Phoenix, Spokane Community College and Eastern Washington University into the same category, at least to the federal government – would eliminate an unfair disadvantage for students at for-profit schools, simplify the higher education system and get rid of a two-tiered system of classifying schools. Private nonprofit schools such as Gonzaga and Whitworth also can currently compete for the funds.

“One thing we need in this country is a competitive postsecondary education system,” said Bruce Leftwich, vice president for government relations of the Career College Association in Washington, D.C., which represents more than 1,200 for-profit schools.

But officials at traditional universities and colleges, who always leave the table hungry at budget time, deplore the idea. Funneling federal money to for-profit companies essentially puts some of the money into shareholders’ and owners’ pockets rather than education, they say. In comparison, nonprofit public schools have education as their primary mission and are held accountable through the political process, they say.

“Our mission is completely different from theirs,” said Scott Morgan, chief operating officer of the Community Colleges of Spokane. “Our mission is to serve the community and its educational needs. Their mission – one, they’re profit-motivated companies, and two, they’re in education.”

For-profit schools are growing because they serve adult populations with flexibility, officials say, and because more and more jobs require some level of training beyond high school. For-profit schools include a wide range of institutions from vocational schools to accredited degree-granting institutions such as Phoenix.

Students at for-profit institutions already can qualify for federal student aid such as loans and grants. The current proposal would allow them to apply for potentially hundreds of millions of dollars in other programs that go to schools that serve a high number of low-income students. It also would eliminate a requirement that for-profits get at least 10 percent of their income from sources other than federal student aid.

Leftwich says the two-tiered system primarily hurts students enrolled in for-profit schools. He adds that proprietary schools are not seeking money to expand campuses or invest in their companies.

“By not having a level playing field, it creates a kind of two-tier system where the government excludes some students and allows others to participate in some programs,” he said.

New school

Green, the director of Phoenix’s Spokane campus, says he doesn’t think his school competes directly with more traditional campuses.

Phoenix students are primarily working adults, and the school employs a lot of online work in its classes to make them flexible. The Spokane branch offers bachelor’s degrees in information technology and business management and a master’s in business administration. It is adding a bachelor’s in criminal justice, Green said.

Students take short, flexible three-credit courses, and classes start once a month, so there’s no traditional academic year. Courses are taught by people working in their field, and there’s an emphasis on combining classroom and real-life experience, Green said. It’s ideal for a busy adult, he said – just as it might be a poor fit for a 19-year-old freshman.

“The Easterns, WSUs, Gonzagas – great schools, and they serve their purpose,” he said. “We feel like we complement what happens” in them.

Green said that Arizona-based Phoenix, far from being unregulated, must meet the requirements of the U.S. Department of Education, the 39 states where it operates and accrediting bodies. And if it’s unlike traditional universities because it makes a profit, it also is unlike them in that Phoenix pays taxes.

Phoenix opened its Spokane campus two years ago and moved into a new 13,500-square-foot building in Spokane Valley this spring. More than 250 students are enrolled through the local branch. Nationwide, enrollment in all Apollo Group schools totals 295,500, about half through online programs.

Many opponents of the congressional proposal say they think many for-profit schools do a good job, but they object to taxpayer money going to a venture that always will have profits as a primary goal.

George R. Boggs, president of the American Association of Community Colleges, has written a letter of opposition to the proposal, calling it a “raid on public funding” that will benefit institutions that charge, on average, six times more in tuition than nonprofits.

Becki Collins, director of student financial assistance for the Washington Higher Education Coordinating Board, says that dividing schools into nonprofit and for-profit camps is a simplistic way to assess whether schools are worthy of public funding.

“I think we should always look at anything that’s publicly funded from the view of the taxpayer. I’m a taxpayer, you’re a taxpayer, we’re all taxpayers,” she said. “The question is: Is the program conducted in such a way that you and I are actually getting what we’re buying with that program?”

A 2004 Department of Education review of the University of Phoenix raised questions along those lines, saying the company pressured recruiters to bring in more students regardless of whether the students were qualified and “systematically and intentionally operates in a duplicitous manner” to prevent regulators from discovering that. Federal rules prohibit paying recruiters based on the number of students they enroll.

Phoenix paid $9.8 million to settle the case without admitting any wrongdoing.

The company, in its statement on the case, denies that it ever violated recruiting regulations and says the case was administrative in nature and not done in regard to academic quality. The allegations were based on a small number of employees and former employees, the statement says, and Phoenix settled the case only to avoid a drawn-out and expensive battle.

‘Dividing line’

In the Spokane area, for-profit schools range from ITT Technical Institute to the Glen Dow Academy of Hair Design.

They range from Apollo College, which grants two-year degrees, to Inland Northwest HVAC training, which provides training programs of less than two years.

“There really is a place for everyone in higher education,” said Green, who earned his undergraduate degree at the University of Utah, then completed a master’s several years later through Phoenix.

Based on growing enrollments throughout higher education and on rising work force training needs, the growth of the for-profit sector is expected to continue. A 24 percent increase in job growth is predicted by 2010, according to the Career College Association.

Green says job growth, coupled with the difficulty of attending college as a working adult, is what makes Phoenix and similar schools work so well. “What it always comes down to is the student and the student’s needs,” he said.

Collins, of the state HEC Board, says both kinds of institutions will be part of serving that growth. She says she would like to see programs based on a more complete review of how institutions recruit, educate and graduate students as the basis for awarding taxpayer money – not just the question of for-profit versus nonprofit.

“That’s not the dividing line,” she said. “The dividing line is the success of their students.”

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