So it has come to this: Private equity will buy Apollo Education, the parent of the Unaiversity of Phoenix. It is "a move," the Wall Street Journal reports, "that would take the beleaguered company out of the eye of public investors."
But perhaps not out of peril from criticism by the White House and investigations by federal and California regulators. Maybe. The "for-profit education" sector is a contributor in politics (see here and here); even better, it fits the ideological bias of the ruling Republican Party (and neoliberal Dems) that the "free market" is the solution to everything.
The former, especially in Arizona, has spent years defunding public institutions of higher education. In other words, real universities, where one received a "universal" education under greater or lesser but real rigorous standards. Where students often had their first real experience with people from different countries, ethnicities and, if they were fortunate, different life paths. Places with real campuses, libraries, and traditions.
Nor will the controversial "business model" of the University of Phoenix likely change much. For all the "free market" triumphalism, the company depended on the U.S. taxpayers for 81 percent of its revenue. Most of this was in the form of federal student loans. The graduation rate is poor. Either way, students are disproportionately on the hook for debt. Since 2010, when the "university" had 477,000 students, it has been bleeding enrollment (See Business Insider's useful primer here).
Of all the hustles and rackets in Arizona that needed a lengthy proctological exam by the press, this is one of the top opportunities not primarily involving water or land use (even more so than public pensions or expense account padding!). Yet it has never, to my knowledge, received it.
I keep waiting.
For the purposes of this blog, I will focus on what Apollo Education and its University of Phoenix meant to the name it appropriated from my city.
John Sperling (1921-2014) embodied many of the traits of the post-Phoenix 40 business moguls in the city. They ranged from the outright criminal in Charles H Keating Jr. to people such as Swift Transportation's Jerry Moyes (2014 fiscal year compensation $2.5 million); Discount Tire's Bruce Halle (richest man in Arizona at $5.9 billion); Mark Shoen of U-Haul/Amerco ($4.6 billion), and pharmaceutical entrepreneur John Kapoor ($3.1 billion).
Sperling was a self-made man, if his biography is to be believed — it has never faced serious scrutiny. He grew up poor in the Ozarks and, thanks to Sen. Ernest McFarland's GI Bill, received a B.A. from Reed College, an M.A. from Cal-Berkeley, and went on to read for his Ph.D. at Kings College, Cambridge. He founded the University of Phoenix in 1973, taking the enchanting name of the city that then unquestionably dominated the Salt River Valley. He turned the humble business college into a multi-billion-dollar enterprise, in no small part thanks to those federal loans for students.
But like all his cohort (and I know everybody loves Halle), he felt no loyalty to the city itself and its well-being (U-Haul's Central Avenue offices go back to the 1950s). Apollo's headquarters sat for years amid the hideous warehouses and distribution centers along the Maricopa Freeway. Once Apollo decided to build a signature headquarters building, it chose not downtown or Midtown, but an isolated site at 32nd Street and the freeway south of Sky Harbor. At the time, the company was worth $14 billion.
For all their flaws and blind spots, Eugene C. Pulliam, the Rosenzweig brothers, Walter Bimson of Valley National Bank, and scores of other earlier business leaders were genuine civic stewards. They saw the health of Phoenix as inextricably entwined with that of their companies. They located their businesses in the Central Corridor and showered arts and charities with money. Not so with most of their successors, with the exception of Jerry Colangelo and, until his misfortunes, Karl Eller.
Sperling reportedly funded liberal politics but he never did a thing for Phoenix, much less to use his wealth to fund urbanism there; even putting the headquarters downtown would have been a huge benefit. Instead, although the company had plenty of downtown offices in cities across America, its "campuses" were in mostly suburban office "parks," in what Jim Kunstler aptly called Geography of Nowhere, or online. In a bit of payback to Glendale's cannibalization of the core, the taxpayer-funded stadium in the cotton field sold naming rights to Apollo. Yes, it's the University of Phoenix Stadium — do they play in the Pac 12?
So Sperling and the University of Phoenix are one of the many profound "might have beens" of recent Phoenix history.
Howard Schultz and Jeff Bezos led and/or founded what became major world corporations in Seattle and their headquarters are responsible for tens of thousands of well-paid jobs downtown. Amazon alone is on track to employ as many as 70,000 in the central core. A relatively modest headquarters is Zillow, which has 1,000 employees downtown.
Meanwhile, one of the biggest headwinds facing Phoenix, and especially its downtown, is that its old headquarters were lost — especially the catastrophic destruction of Dial — and never replaced. This puts Phoenix at an enormous disadvantage against its peer cities.
Now the Apollo employees left in Phoenix are about to get schooled by private equity.
Jon the for profit schools are in my opinion on the edge if not over the edge to being criminal enterprise's. Just as are many charter schools. And AZ is the leader. I know folks that have degrees from for profit schools and these individuals appear to be lacking what they would have attained at a legitimate University, like the U OF A, ASU or NAU.
However regarding John Sperling his early liberal activism , his stance on illegal drugs and his desire to leave his fortune to environmental causes, is interesting.
Posted by: Cal lash | February 08, 2016 at 05:00 PM
Re-Hillary I left a post on that blog re Another stupid Clinton move. This one by Billy
Posted by: Cal lash | February 08, 2016 at 05:02 PM
Seattle is a fabulously successful city. Phoenix, ha ha.
Your lessons in urbanism have helped make sense of why metro Phoenix is such a failed urban environment. It sadly remains a place to pass through on the way to somewhere else. Even the mildly successful entrepreneurs relocate to say, San Diego, after having made their wealth in Phoenix.
Record high temperatures are likely yet again this week in the armpit of the Southwest. Will it be another eight month summer or just six months of inferno?
Posted by: Northern Lights | February 08, 2016 at 05:49 PM
Don't know which is more egregious.....the charter school racket or the for-profit college racket. But both have the same result, the destruction of Democracy. Democracy can't work if the citizens are "carefully taught" not to think.
Posted by: Mary Tooley | February 08, 2016 at 06:38 PM
You want your child to learn in the darkened, narrow, perverted halls of a private school, U pay the fees but no tax deduction. U STILL have to pay to support public schools that resemble the planets open societies. When I see the words Charter scools the name Warren Jeff flashes up. Fortunately he is locked up but still a dangerous creepy perverted sociapath that would like to school your children in the church basement.
Posted by: Cal lash | February 08, 2016 at 07:46 PM
Note: Learning online and getting a degree online can be two different things.
Posted by: Cal lash | February 08, 2016 at 07:49 PM
Then there's the law school industry, where many schools exist to churn tuition based on loans that leave many students deep in debt with very little chance of passing the bar. Check out Paul Campos at lawyers, Guns and Money.com.
Posted by: Dawgzy | February 08, 2016 at 08:27 PM
The primaries. Who will be our messenger, our envoy to the world.
El- Merssoul?
"The bar is going to close and everyone is waiting for us to empty our glasses. To think the sole witness of our meeting is a deaf mute." Kamel Daoud.
Is anyone listening? And do they really care.
Posted by: Cal lash | February 08, 2016 at 11:28 PM
I guess the problem with blaming this solely on the free market is that government largesse was the yeast the raised the dough, so to speak. A truly free market would've had a smaller for-profit educational environment since a truly free market wouldn't have had the taxpayers on the hook for 80% of the corporate profits. So in that sense, the government enabled these swindlers.
The anything-goes federal lending sphere -- mortgages or student loans, they seem to have a history of loaning or guaranteeing money to just about anyone regardless of viability -- effectively made a killing for many avaricious companies selling a lot of near-worthless degrees at prices many multiples higher than their worth.
I just don't believe that UoP could honestly say that its degrees were subjectively or statistically "worth it" for many of the students it recruited.
Now, I do think everyone needs to think carefully about the contracts they sign and the decisions they make, because I do believe everyone bears personality responsibility for their choices as well. Neither the free market nor our government is much good at inspiring or policing ethical behavior, so long as one stays in the gray areas and avoids outright fraud or Ponzi schemes, there seems to be little consequence for dishonesty such as at many for-profit schools.
If everyone was honest, certainly a lot less people would get hurt, but we live in a fallen world and as a result many people got sold a bill of goods and now are on the hook for crushing loans with no real credential to help pay for them.
I'm pretty bearish on higher education in general. There is *plenty* of profit motive at work in most American universities, ever at work increasing their multi-billion-dollar endowments and recruiting donations as a corporate enterprise, not because they truly need them, but just because they know they can get them. This is one of the reasons I don't give money to my "alma mater" and instead focus on giving to my church as well as local and national/international organizations that I feel like are actually helping people and changing people's lives for the better, without forcing them to take out 250,000 in loans first. Relatedly, I can barely watch college sports anymore because all I see is dollar signs and crass opportunism.
Posted by: Mark in Scottsdale | February 09, 2016 at 06:35 AM
Mark,
I put "free market" in quotes because in reality it was a gamed market.
Posted by: Rogue Columnist | February 09, 2016 at 08:57 AM
A great documentary on the subject is Frontline's 'College Inc.' Exposed UofP and it's ilk years ago...
http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/
Posted by: Emerson | February 09, 2016 at 01:48 PM
I can't think of a more perfect irony than the Cardinals selling the naming rights of their home stadium to the Apollo Group. When Bill Bidwill moved the Cards to Phoenix in 1988, he did so under the premise that Maricopa County taxpayers would eventually pay for a new, domed football stadium for his team. "If they build it, I will come."
Over the years, he waited for that mythical domed stadium to be built. "They promised to build it, and so I came." Whether or not this agreement was etched in stone or merely something discussed remains the subject of debate. But one thing is for certain: Bidwill complained bitterly that the Cardinals could not compete with the best teams in the NFL because they played in an obsolete college football stadium and did not get the rights to all of the advertising revenue generated during home games there. ASU took part of it, and the Cards got the rest.
Well, the taxpayers finally agreed to pony up for a new, domed stadium in 2000. But unlike the original plan, which called for the stadium to be built in downtown Phoenix, it was later amended several times, to what we have today: the stadium was plopped down in a cotton field out in BFE -- also known locally as Glendale. Fast-forward a few years to 2006 -- 18 years after the Cardinals played their first game at Sun Devil Stadium -- and it was their time to shine in the new, aptly named "Cardinals Stadium". Well, that wouldn't last -- the money-hungry Bidwills chose not to name the stadium after ASU alum, former Cardinals player, and local hero Pat Tillman; they decided instead to sell the naming rights to the Apollo Group. And the former Cardinals Stadium was renamed after a -- college. Behold, the University of Phoenix Stadium. How ironic.
Posted by: ChrisInDenver | February 09, 2016 at 03:00 PM
"U of Phx" -- a flathead screwdriver education in a Phillips head world.
Posted by: Dan Wallach | February 09, 2016 at 03:55 PM
For-profit or not, at least they taught me how to use an apostrophe.
That's worth the price of a student loan, right?
Posted by: KA Davis | February 09, 2016 at 04:49 PM
KA Davis, that's subjective.
Posted by: ChrisInDenver | February 09, 2016 at 04:54 PM
History lesson. And note, is just my imagination or are Chicagoan's the successful sports guys in AZ.
U of Phx and Bidwell.
https://en.wikipedia.org/wiki/Bill_Bidwill
Bidwell and Capone.
https://en.wikipedia.org/wiki/Charles_Bidwill
Posted by: Cal Lash | February 09, 2016 at 07:21 PM
as I mentioned above Sperling is an interesting study and was early somewhat a Beatnik.
From wikipedia.
Early life and education[edit]
Sperling was born to a poor sharecropper family in the Missouri Ozarks. His father worked for the railroad and his mother was a fundamentalist Christian.[3] He spent several years as a sailor in the merchant marine, and even as a wandering 1950s beatnik. He received his undergraduate education at Reed College, Oregon,[4] a master's degree from the University of California, Berkeley under the G.I. Bill, and then went on to read for a Ph.D. in economic history at King's College, Cambridge. His doctorate thesis examined 18th-century English mercantile history.
Posted by: Cal Lash | February 09, 2016 at 07:26 PM
Breaking news. The mensch will schlong the Donald.
http://www.rollingstone.com/politics/news/poll-against-bernie-sanders-donald-trump-would-get-schlonged-20151223?utm_medium=referral&utm_source=huffpostlive&utm_campaign=partner
Posted by: Cal Lash | February 09, 2016 at 07:34 PM
KA Davis - too bad kids have to rack up a five-figure debt to learn a basic tenet of high school English.
Posted by: Kemo Sabe | February 09, 2016 at 10:16 PM
Beats, Cal, they were beats, not beatniks. Beatnik was made up by the same fool who later came up with hippie, the tiresome Art Buchwald. That's how you know people who call themselves old hippies really never were.
Posted by: Pat | February 10, 2016 at 03:54 AM
Sorry, Cal, Herb Caen came up with beatnik, and hippie was only popularized by Buchwald. But the fact remains that beats didn't refer to themselves as beatniks, nor did people refer to themselves as hippies, at least not in real time. I know, it's not important.
Posted by: Pat | February 10, 2016 at 04:07 AM
Thanks Pat, but I was quoting wikipedia to emphasize Sperling's early years. Personally my favorite Beat or Bohemian was Aldous Huxley. With regard to Hippies or Flower Children, I have known a few. Best "old" hippies I ever met was the couple that gave me a ride in their old VW van, in 96 to DC on Earth day. Which concluded my Urban Camping trip from AZ.
Other favorite Beats are my friends, Artist Elizabeth and writer proffessor George Ellison. But passing time has altered the landscape and almost made unrecognizable the past.
Thanks again Pat for keeping me up to snuff. I owe U and Petro a cup.
Posted by: Cal lash | February 10, 2016 at 10:30 AM
Tillman Stadium would have been infinitely classier! But the NFL is not generally known for its class (a few classy players and coaches not withstanding) and selling the name of sports venues is irresistible today except for the handful of legacy stadiums. ChrisinDenver, you didn't mention whether the Cardinals success in recent years supports Bidwell's argument that not having their own stadium was making them lose.
My wife worked for UoP for several years, including a stint as Sperling's assistant. She liked working for him. I don't have strong personal feelings about UoP, but I do think the for-profit education industry is a bit of a racket. But then student loans are taken advantage of by traditional schools as well, and many believe they are a prime factor in the astronomical tuition inflation of the last couple decades.
Posted by: jon7190 | February 10, 2016 at 11:30 PM