Students at the University of Phoenix should not worry about the schools’ big announcement that it is going to close over half of its physical campuses. Apollo Group, Inc. owns the university, the largest for-profit higher education institution in the country, and it announced the restructuring yesterday and explained the reasons for the closures, which are all financial and not related to any educational quality concerns. For example, from June-August, enrollment fell by 13.8%, dramatically altering the company’s financial status. On The Huffington Post, Justin Pope summarized the company’s losses over the past year:
- Profits have decreased by 11%.
- Income fell by 60% in the fourth quarter
- In the third quarter, the $1.37 share price from last year dropped to only 66 cents.
- Estimates of the impact of new costs lower the share price even more, to 52 cents.
- Apollo’s $4.25 billion dollar revenue from last year has dropped to $4.07 billion, a loss of $18 billion dollars.
- The company’s stock has continued to fall by 49%.
Pope also reports that after Apollo announced their decision to close some campuses, “shares in the Phoenix-based company tumbled nearly 9 percent in after-hours trading.”
How Will the Closings Affect Students?
The number of University of Phoenix students that will be affected by these changes is only 4% of the university’s total student enrollment, but that small number is not irrelevant to the school’s administration. The university is not going to leave those students hanging out to dry. Students will have three options:
- Transfer to an online program, which is how 75% of the school’s students complete their degrees.
- Transfer to one of the other 112 brick-and-mortar campuses, which are located across the country.
- If there is no other campus within reasonable commuting distance, the university will provide courses at a different physical location near the old one until they complete their degrees.
Clearly, the decision to close many physical campuses was not made carelessly without consideration of students’ degree completion needs, and it seems that no one will be left out in the cold, unable to finish their programs.
What the Closures Mean
These changes at the University of Phoenix are a reflection of changes within both the volatile economic climate of a recession and the changing landscape of higher education. The recession has meant rising costs at the same time that income has declined. A significant number of students are currently experiencing economic stress that forces them to drop-out of college or delay enrollment. Bill Pepicello, the university’s president, told The Huffington Post that “people are simply holding off investing money in education at a time when the costs are escalating and the outcomes are uncertain.” If they do not drop-out, students often have to work part- or full- time to afford to attend school and also provide for themselves financially. In fact, Harvard Graduate School of Education’s 2011 “Pathways to Prosperity” study revealed that difficulty balancing work and school was a primary reason students end up dropping out of college.
One of the most significant dilemmas facing all of higher education is how institutions should respond to these changed conditions. Students need to work, which means they need to have more scheduling flexibility and access to more online program options that offer this. All schools are struggling to deal with this problem, so it’s not a for-profit or non-profit issue. The campus closings at the University of Phoenix reflect this reality.
Also, the University of Phoenix’s decision to consolidate its campuses is not an isolated one in the current higher education market. For example, Lincoln School of Technology decided in August to shut down several of its branches. This kind of consolidation is a much better solution to a shifting market than what we’ve seen happen to many colleges over the past year. Several schools have been forced to shut their doors and/or declare bankruptcy, such as Lon Morris College in Texas and ACT College in Virginia. That’s not what’s happening at the University of Phoenix, which as I explained above is providing students at the campuses that will close with several options.
Finally, the drop in enrollment at the University of Phoenix that has propelled this reorganization may reflect a few positive changes for the school’s embattled reputation. For-profit colleges were targeted by congressional investigation, and as a result subject to more rigorous oversight and regulations regarding enrollment and graduation numbers. The university’s slower enrollments may reflect more thoughtful assessments of which students truly have an “ability to benefit” from higher education, which is a federal requirement. In this way, perhaps the decision to focus more on online programs and reduce the number of brick-and-mortar campuses may be similar to Ashford University’s recent decision to reduce the number of its admissions and recruitment staff and instead create more student support positions. In short, what may look at first glance to be an indication of a troubled institution may, upon further analysis, reflect some positive developments that may strengthen the university.
If you are a University of Phoenix student who may be affected by these changes, you can call a special hot line to discuss your options: (866) 992-3302. The important thing to remember is that you have several options, and you may find that you end up in a better situation than you were in before these changes take place.