When was university of phoenix founded

Now, 90 percent of its income stream comes from the federal government in the form of student loan funds. Our mission at Marketplace is to raise the economic intelligence of the country. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

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Phoenix and other for-profits rode a huge wave propelled by the rising demand for higher education and one of the greatest bull markets in U. Once it went public, the University of Phoenix was under intense pressure from investors to keep growing.

To grow, Sperling expanded the school's online degree programs and built campuses in more states and also overseas. By the year , Apollo stock had increased in value by 1, percent since its IPO. It was the nation's largest and fastest-growing private university, with operations in 35 states and a growing population of students from all over the world taking classes online. John Sperling was a billionaire. And then the company's business started slowing. The University of Phoenix believed what that generation needed was associate's degrees.

These degrees -- which typically cost less and take less time to earn -- had been gaining in popularity as more people began to pursue postsecondary education. Phoenix created a new college called Axia that offered associate's degrees online. The degrees were priced so that students could cover the full cost using just government grants and loans. But Axia ended up causing a big problem -- one the University of Phoenix is still trying to recover from. Most of the students who started in the online associate's degree program ended up dropping out.

An investigation by the U. Senate's Health, Education, Labor and Pensions Committee, chaired by Democrat Tom Harkin, found that in and more than , people enrolled in the online associate's degree program. A year later, 66 percent of them had left. Senator Harkin says the business model of the University of Phoenix -- and the business model at other for-profits -- is to sign up as many students as possible.

They pay their shareholders, they pay their school administrators. And the student drops out and has this debt hanging over his or her head for the rest of their life," says Harkin. Harkin is particularly concerned about how much money the University of Phoenix gets from the government. In , 86 percent of revenue at the University of Phoenix came from the federal government in the form of student loans and Pell Grants.

That's not unusual in the industry. Senator Harkin's Senate committee estimates that in , the nation's 15 publicly traded for-profit education companies received 86 percent of their revenue from taxpayers. That total includes federal loans and Pell Grants, as well as government money that helps military members and veterans pay for school.

This is a big change from the early days of the University of Phoenix, when students like Muriel Duncan had to pay with cash or a credit card because there was no way of getting federal aid. Once the university was accredited, in , students could begin getting federal student loans and grants. Still, as recently as , the University of Phoenix got less than half its revenue from federal financial aid programs. Most of the money came from students paying out of pocket and employers helping through tuition assistance programs.

The University of Phoenix gets a higher proportion of its money from student aid programs because it serves more low-income students than it used to, and low-income students are eligible for both Pell Grants and the maximum student loan amount. In recent years the federal government has increased the amount of aid low-income students can get. More than half of undergraduate students at the University of Phoenix used Pell Grants in Nationally, 27 percent of undergraduates received Pell Grants.

This shift towards more low-income students has been happening at other for-profits too. Research by the Institute for Higher Education Policy finds that in the last decade, low-income students have been increasingly drawn to for-profit colleges. They now attend for-profits at four times the rate of other students.

Critics of for-profits are concerned that so many low-income and military students choose for-profit schools. Compared to community colleges and state universities, for-profits are expensive.

The investigation by Senator Tom Harkin's Senate Committee found that bachelor's degree programs average about 19 percent more at for-profits than at flagship public universities; associate's degree programs cost four times as much at for-profits as they do at community colleges. Senator Tom Harkin would like to see more students, especially low-income students, choose public colleges and universities.

But that is becoming increasingly difficult for some students. California is a prime example. Drastic state budget cuts in recent years have forced colleges and universities to turn away hundreds of thousands of students because there is not enough money to educate them. Thousands more can't get the classes they need because of overcrowding. What's happening in California is a more dramatic version of what's happening all over the country: State support for higher education is going down, tuition is going up, and students are being turned away, or can't get the classes or the counseling they need to be successful.

John Sperling looks at what is happening, especially in California, and sees the same problem he was trying to solve back in the s. But critics are uncomfortable with the fact that John Sperling can make so much money when the traditional system fails. Sperling has no patience for that kind of criticism. Am I supposed to work hard to be a failure?

Sperling is in many ways the epitome of the American Dream. He was born with nothing and through education and hard work became wildly successful.

That path to success is more expensive today. College tuition has been rising faster than inflation for decades, and students at all schools are being asked to pay more of the cost. The only way most of them can do it is to borrow lots of money. Critics of for-profit colleges say that, with tuition so high already, there's no room for big profits in higher education. But advocates for the University of Phoenix and other for-profit schools say they're good for the country because their business model allows them to expand and innovate rapidly.

Even many experts who have mixed feelings about for-profits say America needs them in order to meet the growing demand for higher education. The Tomorrow's College audio and web series explores how higher education is changing and why it matters. For more conversations about education, subscribe to our weekly podcast iTunes.

American Public Media's online services are supported by users like you. Contribute now…. Muriel Duncan holding her bachelor's degree from University of Phoenix. John Sperling at his home in Phoenix.

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John Sperling, Founder, University of Phoenix. He changed higher education so you could change your future Dr. Anything worth achieving takes time. Dare to do something big.