University of Phoenix lays off 900 after student exodus

University of Phoenix lays off 900 staff as enrollment plunges - Jun. 30, 2015

The for-profit institution has shed about half of its students over the past five years, and the university has fired 900 employees since September. That works out to over 3 workers laid off every day.

University of Phoenix's parent company, Apollo Education Group (APOL), announced dismal quarterly earnings Monday after the markets closed. Its revenue and student enrollment both dropped about 14% from the same time a year ago.

 

I see it getting worst as more state and private schools enter the DL game. I was looking at a certificate program at UofP before I found DI. I learned quickly that a lot of state and private colleges offered the same programs for a lot cheaper. I think more people are learning what the good folks at DI have know for a long time.

 

I think, and this is my opinion, UOP will have to adapt or seriously have problems down the road. I am not sure how they will do that ( adapt, that is) however.....as Lawrence stated, with more and more state schools getting into the game, UOP will continue to have issues.

 

Wow! The article said that next year they will have an enrollment of 150K students (which is still huge). IIRC, a few years ago they had an enrollment of well over 600K students. Losing 75% of your student body has to be devastating.

 

Schadenfreude!

(Look it up.)

 

Perhaps it is the vile corporate soul-sucker in me, but I don't think that "right-sizing" is simply a buzz word companies use before they collapse.

If you start a small company and hope to make significantly more money than you typically need to scale the business up. If you start a lemonade stand, you might make a good living. But as you franchise more lemonade stands and begin packaging your secret recipe brew and selling to grocery stores you are going to make much more money.

Many companies do this and thrive. Many more do this and attempt to grow too large to sustain themselves over the long term. So a company can do a few things: 1) Double down and expand even further 2) collapse 3) downsize to a more manageable size to better position itself for long-term survival.

Yeah, UofP once had 600k students enrolled and now they are down to 150k. That's not great news. But it doesn't mean that the school is going down the tubes. It may just mean that they should shoot for a 150k enrollment and that the 600k was merely an unsustainable bubble. CEC is doing something similar. It is divesting all of the career school holdings. Pretty soon, CEC hopes to only have American InterContinental University and Colorado Technical University in its portfolio. Those two make up the bulk of their bottom line. The rest are marginally profitable and carry with them the risk of bringing down the whole operation (because there is quite a bit of scrutiny focusing on career schools).

I get it. There was a craze. So everyone ran out and enrolled. Many graduated. Many did not. It was a "new" way for people to earn a degree (at least in the eyes of most consumers). Now it's leveling off. More competition? Of course there is. But these schools are probably doing their best work through corporate partnerships. My last company eagerly paid for graduate degrees from DeVry. In fact, we had a DeVry rep visit our building twice a year to round up a fresh batch of enrollees. At my present company, up until very recently, Capella enjoyed the same sort of choice placement. They still remain on our preferred list for tuition assistance. For many of our employees Capella is going to be their top choice. And they don't have to worry about the price because we're paying for it.

UofP's target demographic hasn't disappeared. It's still there. And while their opposition is quite vocal (and sensationalist, it seems). Remember that there are hundreds of thousands of UofP grads in the workforce and in academia and more every year. Those people are becoming human resource managers and are represented in hiring management level positions in a variety of industries. So to say that a person from UofP is unemployable or that all employers think the degrees are crap has no basis in reality. Professionals with successful careers who felt they needed an MBA (and their employer paid for it) and earned a degree from UofP aren't going to be employed any less. They won't get fired because the tide has turned against their alma mater. And I can't imagine them discriminating against fellow UofP grads because some guy on yelp (a really reliable source for college information, by the way) offered the insightful message that UofP "sucks."

Most of these "I can't possibly see how UofP could survive" statements are based upon one's personal approach to education. That's great. But your experience doesn't apply evenly to the masses. I self-fund most of my educational pursuits. So, for me, price is a major consideration. But I haven't found a single person in our tuition assistance program who is concerned about price. I can tell you that our biggest enrollment numbers are for schools like Capella, UofP, CTU etc. combined with very expensive private non-profits (Benedictine, Drexel, Syracuse University etc). An employee has yet to put in a request for tuition assistance to attend Western New Mexico University, Clovis Community College or Fort Hays State.

Why?

I can only speculate. But I imagine it's that people are either responding to marketing or defaulting to name recognition. But none of them are throwing out low price alternatives.

So if companies begin to crack down on this sort of thing then I can see UofP being in very big trouble (at the bottom of a list of private and public universities, however). Barring that, when employer (including the military) tuition assistance and the GI Bill make it so you don't have to pay out of pocket, I can understand why you might be a bit more casual in spending the extra money. Time will tell if the big for-profit operators can hold onto their shirts.

The market is there. The students are enrolling. They are just finding that they can't seize the amount of market share they had hoped to.

 

University of Phoenix will have to back to its roots, innovation and flexibility. With more state universities offering the same products as UP. UP will have to offer more, like higher quality than state schools, and competitive pricing. UP will have to used its for-profit status to be more agile and responsive to online learners' needs. After all, UP is for-profit because it thinks it can do a better job at education than the States and make a profit at it.

 

Maybe....

Sure, this could be the beginning (or continuation) of 'right-sizing.' Perhaps. But they're a for-profit, corporate university. In other words, a business. That means they have a fiduciary responsibility to their shareholders. Retrenchment will almost certainly drive the stock southwards, which burns stockholders.

Also, this is a university that has been driving growth since its very existence. It might not know another approach. Its employees are not geared that way, certainly, and I doubt its current leadership does. There may be a lot more shaking out before this is done.

Corporate behemoths become dinosaurs when they cannot adapt to changing conditions. An example of this was the passenger railway business. Oh, I'm not suggesting that trains could have held off planes and cars--not in this country. But if the railroads thought of themselves as transportation companies, they could have moved into those other forms. Instead, other companies came along to take their place.

An interesting example of the opposite is IBM. This is a company synonymous first with corporate computing, then with personal computing. They practically invented the PC business (but not the actual PC, which preceded their entry into the market). They dominated both the mainframe and personal computing worlds. Now, they're in neither. In fact, imagine selling off your core business--the PC--in order to move where the computing world was really heading: solutions. They lived because they changed.

UoP has an incredible footprint. They've got awesome assets--assets that could be used in new forms and ways...if they have the imagination and the will. What if, instead of a university, they thought of themselves as a learning company? Or a performance company? Or a company that comes in and improves your company? Or who knows what else? They could establish a whole new industry; they're that big. Or they could accept that they're in the 'mature' phase of the corporate cycle and seek ways to elongate that curve and allow them to stay relevant for as long as possible. But that is certain death, in terms of outcome if not definite time frames.

This could be a very exciting and imaginative time for Apollo and UoP. Or it could be boring. I suspect the latter.

 

I'm afraid I disagree with you.

Why does UofP have to offer anything differently? Why do they need competitive pricing?

Colleges and Universities have never, historically, tried to outprice one another (at least on a large scale).

Ithaca College costs between $37,000 and $52,000 per year (depending upon if you dorm on campus).

Cornell University (the contract, not the endowed colleges) costs $32,740 per year for NYS residents.

So then, according to your logic, Ithaca College must offer a higher quality education (since it is charging more than neighboring Cornell). I'm sure graduates of IC's music program would argue that their music education tops Cornell's. And I suppose you could argue that smaller class sizes are a plus. But are you really getting a higher quality education (overall) or receiving a degree with more utility? Is a B.S.B.A. from Ithaca College equivalent to, or more respectable than, a B.S. from say, Cornell's Dyson School of Management? You could try to make that argument. But I would argue that Ithaca, NY (and, as a consequence, Ithaca College) is only really well known because of Cornell.

So let's pick some less obvious schools. How about Wilkes University in Wilkes-Barre, PA? Small, non-profit, a big leafy quad in the center. At $32,000 per year (without room and board) you save a whopping $742 over attending Cornell (if you're a NYS resident and attending a contract college).

So, according to your theory, Wilkes and Ithaca are either about to close up shop or are beating an Ivy League university into submission. Neither of which, however, are the case.

Schools that offer a competitive value proposition are certainly attractive to students. You go to Harvard Law because your J.D. comes with it networking power (through its alumni base) that is unparalleled at most institutions. You might go to MIT because they have a top program in your choice area of engineering. You might study at Stanford because you'll be (at least nominally) studying under a nobel laureate in your chosen field.

Beyond that, most people choose colleges because 1) they are close 2) one or both parents attended 3) for whatever reason they establish a connection to it (football, respect for a faculty member, that really cool high school program they did there one weekend, etc). 4) because the university actively marketed themselves and it worked.

When I was in high school we had our junior year retreat at College Misericordia in Dallas, PA. It was a pretty lame experience. They herded us into a gym and sat us on folding chairs while a priest made us sing uplifting pop music (I hate whimsy) and talk about how we should never use birth control (I think there was some generic "You can do it!" pep talks thrown in there as well). The entire afternoon was spent with us being divided into small groups and given tours of the campus by students who are talented at smiling and talking while walking backwards.

The result? My good friend Mark fell in love with the place. He was overwhelmed with the sheer amazingness of this fairly ordinary small campus. Why? No idea. He just liked it. They were marketing to us and it worked (on a few people). They accepted college applications on the spot. Mark applied. He put in zero other college applications following that. Three months after we graduated the following year, Mark was sitting on campus at Misericordia for orientation. (Note: I would later learn that Misericordia did the retreat for free in exchange for being allowed to essentially hijack the experience into a recruiting session)

While we're at it, Misericordia University (as it is now called) costs $28,300. Compare that to PennState's in-state rate of $17,502. Oh, and if you're an out-of-state resident wanting to attending PSU, your tuition jacks up to $30K.

So does Cornell's ILR School, CALS and College of Human Ecology only offer an NYS resident $2,000 (annually) worth of education more than Penn State? Are all of the Nobel laureates and the cutting edge research at Cornell only worth an additional $2k? And for Misericordia, exactly what innovation are they offering students that is worth $10k+ per year more than Penn State? The campus is the size of a pack of gum and I've not seen many press releases for medical breakthroughs coming out of the place (of course, Misericordia also doesn't have a medical program, so that could be the reason).

My point is that if quality of education and competitive pricing were so essential to survival in the world of higher ed then a lot of well established universities would have gone under well before UofP hit the scene.