A For-Profit Accountability System?

The University of Phoenix earned both praise and some criticism last year when it released its first "academic annual report," which was designed to respond to growing calls for higher education accountability and to provide a peek behind the curtain at the outcomes for students at the country's largest postsecondary institution. The criticism came from those who questioned the legitimacy of some of Phoenix's data, while the university generally earned kudos for putting out some unflattering information without having been forced to do so.

The university released its second annual academic report Monday, and the same basic dynamic applies. The Phoenix report presents lots of data, some of it positive and some of it negative. Some of it is straightforward, while some is presented in ways that are either incomplete or, in one case, misleading -- failing to make clear that it is using a different formula for the "completion rates" of its students than for the graduation rates of public two-year and four-year students with which it compares them.

But while Phoenix may have framed its academic information (as many colleges do) in the most flattering possible ways, it remains virtually alone among its peers in the for-profit sector of higher education in revealing this sort of information. While several other sectors and groups of colleges and universities have created public accountability frameworks in recent years -- including one, College Choices for Adults, in which some corporate colleges participate -- private sector colleges have yet to make public this kind of data in any coordinated way. That's despite the fact that many leaders among the colleges agree that their biggest challenge going forward is to prove, through data-driven, independent means, that they are successfully educating students.

"Historically, these are still competitive organizations that don't go out of their way to be ultra-transparent, because of the sense that the more information you disclose, the more you're giving away competitive advantages in the market place." said Harris N. Miller, president and CEO of the Career College Association, which represents the for-profit college sector. "But we seem to be coming toward a tipping point [in favor of being more transparent], and I would bet that in the next three to five years, there will be a lot more easily accessible, publicly available data about the performance of many of our institutions."

Daniel M. Hamburger, president and CEO of DeVry Inc., disputed the assertion that "private sector" colleges, as he calls them, have lagged in accountability efforts; DeVry, he noted, has published graduation, employment and other information about its graduates, by field of study, since 1975. He applauded Phoenix for its extensive report, though, and said DeVry planned to publish similar information soon.

Bill Pepicello, president of the University of Phoenix, said in an interview that part of the reason other for-profit colleges "have not followed our lead" or teamed up to create a broad accountability framework is because the institutions have debated whom to compare themselves against, given the wide variation among types, size and accreditation of colleges (publicly traded vs. privately owned, regionally vs. nationally accredited, dozens of campuses vs. single campuses).

"If there's been any slowness in the sector to mobilize in this way, it's that we're still trying to figure out exactly what the set of institutions are that we want to measure ourselves against," he said.

The Phoenix Portrait

The big challenge for Phoenix (to the extent that a university with hundreds of millions of dollars a year in profit is challenged) and its peers in for-profit higher education is the perceived need to measure themselves not against one another, but against the traditional institutions -- largely community colleges and open-access public institutions -- with which they compete for students. With Phoenix and its peers charging significantly higher tuitions than most public institutions, for-profit colleges are feeling pressure (from regulators more than consumers, at least so far) to prove that the education they are delivering is worth the higher price.

Most of the data that Phoenix presents in its academic report -- which includes information on such national measures as the National Survey of Student Engagement, ETS's Measure of Academic Proficiency and Progress, and the Standardized Assessment of Information Literacy Skills -- compare the for-profit giant with master's colleges. (In addition to significant demographic data showing the exceptional ethnic and socioeconomic diversity of Phoenix's students, the university also provides results of internal surveys of alumni -- which can be compared only to the previous year of Phoenix data -- and includes salary data suggesting that Phoenix students make bigger wage gains while they are enrolled than the average American worker does.)

Phoenix students generally report higher numbers for their institution on the student engagement survey than do students at master's colleges, on average; Phoenix students, meanwhile, score lower -- but not significantly so -- on the academic proficiency exam, and appear to make similar progress as they move from their freshman to senior years.

Phoenix officials caution against drawing too many conclusions about trends, given that this is just the university's second report. But they acknowledge small declines from 2008 to 2009 in students' scores on the academic proficiency exam (though they do show higher scores for seniors than for first-year students, suggesting some improvement while students are at Phoenix). The university's completion rates also declined slightly, to 26 percent for associate degree students and 36 percent for bachelor's degree recipients in 2008 from 27 and 38 percent, respectively, in 2008.

The academic report compares the 2009 figures to the federally derived graduation rates for two-year (22 percent) and four-year (55 percent) public institutions, noting that the federal rate is wholly inadequate as an indicator for a place, like Phoenix, where so few of the students fit the definition of first-time, full-time freshmen (excluding transfer students) that the federal government uses. But the report fails to note explicitly that it uses a different definition entirely for the Phoenix completion rates it provides.

Via e-mail, a spokesman said that the university "tracks completion rates for students who enter the university at any point during their education experience," including transfer students, and that its completion rate "equals the number of students who completed their program within 1.5 times its normal duration over the number of students who completed at least three credits with University of Phoenix." The Phoenix approach effectively excludes those students who drop out quickly.

Presumably to combat the impression that students at Phoenix and other for-profit colleges may be paying more than they have to for a higher education, the university's report also contains a table that purports to show the "net cost to taxpayers per student" at different types of institutions. It includes categories such as "direct government support" (showing public and private nonprofit colleges getting thousands of dollars per student), "expected future loss due to loan default" (with somewhat higher figures for for-profit colleges), and "taxes foregone on corporate profits," with, as expected, much higher figures for the nonprofit colleges. The total per student "cost to taxpayers" for the various sectors: $15,529 for public colleges, $21,232 for private nonprofits, and about $1,400 and $725, respectively, for for-profit colleges generally and Phoenix.

But totally absent from the table, for reasons Phoenix officials did not explain, was any acknowledgment of the vast sums of money that flow into the coffers of for-profit colleges from the Pell Grant and other federal aid programs -- money that clearly seems like it belongs somewhere in an accounting of the taxpayer backing of different types of institutions.

Data-Based Changes

Pepicello, Phoenix's president, said the academic reports were helping to drive home for university administrators the reality that the "next generation" of learners is coming into college not only less prepared academically, but with a lesser grasp on what higher education is and how to succeed in it.

As a result, he said, the university is introducing three new efforts aimed at helping that new generation of students maneuver through the institution -- and even decide, up front, if it's for them. All students who enter with fewer than 24 credits (though that threshold could change) will take a free, three-week, non-credit "university orientation" course that focuses, Pepicello said, on the "heuristic skills" students need and the "accelerated" college environment they'll face.

"One of the things we've discovered is that the affective part of the student is as important as the academic or cognitive part," he said. "Many of them, as first generation students, don't really have an idea what the academic experience is like, and we'll try to help them integrate it into the rest of their lives, as opposed to being something that is separate and foreign." By exposing them to that course free, he said, "we'll be giving students the ability to self assess [their readiness] before they become an enrolled student. 'If this is what it's like, is this really what I want to do?' "

Phoenix will also put in place a customized first year sequence of courses for inexperienced two- and four-year students, focused on the liberal arts and academic skills and strategies. And it plans a new approach to remediation emphasizing "just in time" skills, Pepicello said.

Flawed but Out Front

Even if the data in Phoenix's report have limitations, the fact that the university is putting them out there at all differentiates it from most of its peers. Michale McComis, executive director of the Accrediting Commission of Career Schools and Colleges, said a "culture of accountability" has been ingrained in for-profit higher education for more than a decade, as accrediting groups like his have toughened their reporting requirements on institutions.

But the idea of reporting information externally so that information can be used by policy makers for accountability purposes and "by students as part of their paradigm for choosing" where to enroll may be the next step, he said.

With the federal government turning up the regulatory attention it pays to the sector -- Monday marked the start of the next round of negotiations over potentially toughened rules for for-profit colleges -- external pressure on the institutions is certain to grow, said Jeffrey M. Silber, a managing director at BMO Capital Markets and a leading analyst of the career college sector.

"The train's already left the station -- the government appears to be looking for more transparency and accountability" from all colleges, including for-profit institutions, said Silber. "I would assume you'll be seeing a lot more transparency in the future."