University of Phoenix (The American Independent) University of Phoenix' plot to corner the cheap education market In an insidious power play, the for-profit university lobbied against "community college baccalaureate degrees"

The University of Phoenix played a key role in defeating legislation that would have allowed community colleges in Arizona to offer low-priced bachelor’s degree programs, interviews and state records show.

The for-profit college, which is one of the state’s biggest employers, provided research and political muscle for a multi-year lobbying campaign against “community college baccalaureate degrees” – out of concern that those programs would undercut its business model.

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For-profit schools and community colleges generally serve the same working, non-traditional student demographic, but tuition rates at community colleges are often much lower.

Historically, community colleges have offered two-year associate’s degrees, with students then transferring to other schools to earn a bachelor’s degree – also known as a baccalaureate degree. Recent efforts by community colleges to offer their own baccalaureate degree programs have been controversial, in part because they dramatically expand the traditional mission of these schools.

But advocates say these programs – which typically require approval from state lawmakers – better respond to student and employer needs by providing affordable, career-oriented, four-year degrees.

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Beginning in 2005, the University of Phoenix lobbied Arizona state lawmakers against the degree programs, arguing that they would cost taxpayers too much money, duplicate existing programs, and “harm” the private college sector.

The company also sponsored research, circulated a letter, and published an op-ed opposing the programs.

And in a 2006 meeting with Wall Street analysts, University of Phoenix founder John Sperling publicly credited one of his top executives with “killing the community colleges’ four-year degree program in Arizona.”

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“I’m not sure I want to be known as the woman that killed the community colleges in Arizona,” responded former University of Phoenix president Laura Palmer Noone, “but I appreciate that plug for my political ability.”

The company continued its involvement through 2011, primarily as an influential member of an association of private colleges that lobbied annually against community college baccalaureate degree programs. The lobbyist for the association also serves as a lobbyist for the University of Phoenix.

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The University of Phoenix’s lobbying effort against community colleges appears to conflict with the public image it promotes: a partner to community colleges and an advocate for working adult students.

Indeed, the school is planning to launch more than 100 new partnerships with community colleges, which will funnel community college students into bachelor’s degree programs at the University of Phoenix. These partnerships are an important part of efforts to restore the financial health and reputation of the company, executives have said.

One of the partnerships is in Arizona, where the company’s lobbying has helped ensure community colleges cannot offer their own bachelor’s degree programs.

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In interviews, University of Phoenix spokesmen downplayed the company’s involvement in the lobbying campaign.

“We look at community colleges as partners, and we understand that they play a critical role in higher education,” University of Phoenix spokesman Ryan Rauzon told The American Independent.

“Clearly every state budget vote is about priorities, and having community colleges offer baccalaureate degrees clearly is not a priority in Arizona right now,” Rauzon said, noting that state lawmakers have repeatedly voted against the programs.

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“Why not focus limited public resources on the clear mission of community colleges: to provide two-year degrees?” he added.

Rauzon confirmed that the company has funded research for the lobbying effort and that it is a member of the Independent Colleges and Universities of Arizona, the association that has recently lobbied against community college baccalaureate degrees.

But both Rauzon and another spokesman, Rick Castellano, denied that the University of Phoenix spearheaded the lobbying campaign.

“It’s a debate that has many, many players,” Rauzon said, adding, “It is misguided to inflate our role.”

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As for the company founder once crediting a University of Phoenix executive with “killing the community colleges’ four-year degree program,” Rauzon said, “I think it’s unhelpful to focus on one comment without taking into account [Sperling’s] whole history of helping working students.”

Today, an online ad for the University of Phoenix – specifically targeted at students interested in community college – still touts the fact that the for-profit school offers bachelor’s degrees and other programs that are unavailable at most community colleges.

“We offer more degree levels than community college,” says the ad. “From associate, bachelor’s, master’s and doctoral degrees to certificates and single courses, we offer the programs that fit your lifestyle and career interests.”

The ad doesn’t mention the tuition price difference. A recent report from Democratic Senator Tom Harkin found that various University of Phoenix degrees cost substantially more than equivalent degrees at public universities and community colleges in Arizona.

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Turf wars

Community college baccalaureate degree programs frequently inspire vicious turf wars when they are proposed in state legislatures. Public universities do not want to lose students – and the state funding that comes with them – to community colleges, and private schools do not want the low-cost competition.

Moreover, some officials at both two- and four-year institutions say baccalaureate programs will stray too far from the core mission of community colleges, which includes open access, continuing education, and transfer pathways.

Yet, the programs have been gaining traction across the country as lawmakers and educators attempt respond to an increasing demand for bachelor’s degrees. According to the Community College Baccalaureate Association, a Florida-based group that advocates for the degree programs, more than a dozen states permit them.

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Some higher education experts say that community college baccalaureate degree programs will pave the way for a more equitable higher education system.

Richard Kahlenberg is the executive director of The Century Foundation’s “Task Force on Preventing Community Colleges from Becoming Separate and Unequal.” He told The American Independent the programs are a “favorable development.”

The primary concern of his task force, Kahlenberg explained, is that community colleges “are increasingly educating low-income and minority students separately and apart from middle-class, more affluent, and white students, who are concentrated in the four-year sector.”

“If community colleges become a place for low-income and working-class students almost exclusively, they are unlikely to have the political capital to garner adequate resources, and there’s certainly a lot of evidence that community colleges are already shortchanged financially,” he added.

“Allowing community colleges to offer bachelor’s degrees will likely bring about a stronger middle-class presence in the schools, which should translate into stronger funding for those institutions,” Kahlenberg said.

But garnering the political will to implement the programs is often no easy feat.

Dr. Eduardo Padrón is the president of Miami Dade College, a nationally recognized community college that offers some four-year degrees. He also serves as co-chair of The Century Foundation’s community college task force. In 2011, the Aspen Institute recognized Miami Dade College as one of the top community colleges in the country.

Recounting the political battle in Florida over community college baccalaureate degrees, Padrón said, “Don’t think that we didn’t have opposition. Are you kidding me? I can show you the scars.”

“But the legislature was determined to provide access and to do better by the workforce, and that’s why we’re doing it,” he added. “It’s a win-win situation. It costs the taxpayers less, it costs the students less.”

Padrón said that private schools in Florida – both for-profit and non-profit – were among the most forceful opponents to the baccalaureate programs, which they saw as “tremendous competition.”

“But you see after, now I think it’s 10 years of this experiment in Florida, all institutions have grown,” Padrón said. “All institutions are doing well. Nobody is having a problem with enrollment, if anything, we’re having a problem – all of us – in not having enough resources to serve the students well. So all of the fears that the privates will disappear, this has not proven true.”

The “big dog”

In Arizona, four-year public and private colleges were allied against near-annual legislative efforts to grant community colleges the authority to offer bachelor’s degrees in fields such as nursing, teaching, and business.

According to several people involved in the matter, the University of Phoenix played an especially prominent role in the annual lobbying efforts against the programs.

A lobbyist for one community college, Mike Gardner, told The American Independent, “The University of Phoenix, they did all the heavy lifting. They really put the squeeze on members.”

“They are the big dog. Period,” Gardner said.

Gardner’s client, Eastern Arizona College, was the driving force behind several community college baccalaureate degree proposals, none of which were successful. Located hours from Arizona’s nearest public university, the small, rural community college backed a series of bills that would have allowed it to offer some career-oriented bachelor’s degrees.

Gardner said that the University of Phoenix “had a lot of clout, and they were able to kill the bill.”

“Their greatest concern was that community colleges would have the opportunity to offer four-year degrees, especially online,” he recalled.

“That’s what scared them to death,” Gardner added, “Because there’s so much money to be made online, and they didn’t want community colleges coming in at a much lower tuition rate.”

Don Isaacson, the lobbyist for the Independent Colleges and Universities of Arizona – an association of private for-profit and non-profit colleges of which the University of Phoenix is a member – told The American Independent, “The University of Phoenix was opposed to community college baccalaureate programs, as were all of the other ICUA schools, to varying degrees.” Isaacson also serves as the University of Phoenix’s lobbyist in Arizona.

In 2011, on behalf of the ICUA, Isaacson testified against a proposal that would have allowed Eastern Arizona College to offer some bachelor’s degree programs. He told legislators at the time: “Why have the privates been involved in this issue since 2005? It’s because it won’t stop at Eastern. … If you pass it, it’s going to spread. And if it spreads, it’s going to kill private higher education in this state.”

In a hearing on a similar bill three years earlier, Isaacson, representing the ICUA, argued that community college baccalaureate degree programs would “put other programs simply out of business.”

In an interview with The American Independent, Isaacson emphasized that legislators – not outside groups or individuals – bear the ultimate responsibility for the passage or the failure of a bill. Arizona lawmakers repeatedly voted down community college baccalaureate proposals.

Rich Crandall, a Republican state senator and supporter of the Eastern Arizona College proposal, said that the bills faced significant opposition from the state’s public universities and private colleges. He cited the University of Phoenix in particular.

“The privates, their big fear was just pure competition. And it ticked us off because it’s like, do you know how many people around Eastern Arizona College attend the University of Phoenix? Like, two. It’s so expensive,” he said. “But they just said, hey, we don’t care, we’re going to fight this as if it’s the last battle because we think it’s the camel’s nose. So they killed the bill every year.”

Crandall added, however, that he believes for-profit colleges play an important role in helping the state deliver more bachelor’s degrees and that they offer some “attractive” programs.

Another state legislator, Republican Rep. Frank Pratt, sponsored a separate bill last year that would have allowed community colleges to offer baccalaureate degrees.

He told The American Independent: “I was absolutely slammed by the universities and the privates and by people that are – well, types like the University of Phoenix, for example. And I’m not picking on them particularly, but they sort of specialize in getting MBAs or things, you know, after someone has already completed a degree. They’ve done all of that. But it’s actually quite expensive. And I thought the time was right, but the opposition was incredible to it.”

This year, no community college baccalaureate degree proposals were offered in the state, in large part because Arizona State University recently established a partnership with Eastern Arizona College that is offering some bachelor’s degree programs.

Still, an official at Eastern Arizona College said the school has not ruled out future efforts.

“We’re excited about these partnerships,” spokesman Todd Haynie said. “But I think that ultimately our students would be interested in pursuing their bachelor’s degrees here through Eastern Arizona College.”

Looking ahead in California

The University of Phoenix also registered to lobby on legislation last year that would have created a community college baccalaureate pilot program in California, the state where it conducts the most business by revenue.

Rauzon, the University of Phoenix spokesman, said the company registered to lobby on the bill only out of an abundance of caution.

The University of Phoenix lobbyist, Rauzon said, made a single inquiry regarding an amendment to the bill. According to Rauzon, the company did not take an official position for or against the legislation.

The bill originally would have established a community college baccalaureate degree program within the San Diego Community College District. The community college district is the second largest in the state and also serves a sizeable military population. A subsequent amendment dropped San Diego Community College District from the bill and substituted in two other community college districts.

Like similar proposals offered in California in years past, the bill did not receive a floor vote. Involved parties most frequently cite budget cuts to higher education as the reason these programs have failed to launch in California. Community colleges in California, they say, are simply trying to remain afloat amid massive budget cuts; they are ill-equipped to deal with significant program expansion.

According to an annual San Diego Community College District report on transfer trends, the district’s transfers to the University of Phoenix increased 29 percent from the 2006-07 school year to the 2010-11 school year.

A spokesman for San Diego Community College District, Richard Dittbenner, told The American Independent in an email that the school was still interested in pursuing a baccalaureate degree program. He pointed to an op-ed two of the school’s board members wrote this summer in support of the idea.

“Our preference is to work from ‘ground-up’ in the days ahead. That would involve consultation with other interested system stakeholders, accreditors, exploration of funding models, and the like,” Dittbenner said.

He dismissed the notion that the University of Phoenix would hold considerable political sway on the issue in California.

“I can see why the University of Phoenix would lobby against B.A. degrees at community colleges,” he said in an email. “However, California is a different state with a different urban demography and political climate compared to [Arizona]. Also, [the University of Phoenix] is based in Phoenix with considerable political clout there, but about 1/6 the size of California and only two major public university campuses compared to over a dozen in California.”

Rauzon said that the University of Phoenix will evaluate any future legislation when it becomes available.