Financial Structure: A Condition of Accreditation?

Accreditation probation? The risk of losing federal student loans and grants? Losing face as an academic institution of higher learning? All of this now is placed before the University of Phoenix as it deals with a Draft Report it received on February 22, 2013 from the Higher Learning Commission (“HLC”) concerning its comprehensive evaluation process recommending that the school be placed on probation. What activities or wrongdoing should bring such harshness? – academic violations, inferior faculty, inadequate curriculum, any of a thousand other academic measures? No, this punishment was attributable to an alleged deficiency primarily in the area of governance between Apollo Group and University of Phoenix .

Wait a minute – this academic review now turns on how an institution is owned? Finance? You have got to be kidding! Let’s see – the University of Phoenix is wholly owned by Apollo Group, who appoints the members of the University (its wholly owned subsidiary) Board of Directors. This is consistent with every other wholly owned subsidiary in the country. The University has its own Board and makes its own decisions. What does this have to do with Academic Accreditation? This finding was completely unexpected, a surprise in every way. On one hand the report validates the academic experience, the faculty, the degree program and the students. But it criticizes the ownership structure. Is the ownership structure between Apollo and the University unique?

Well, no! If this is a valid deficiency against the University of Phoenix, isn’t it an indictment of every For-Profit educational institution in the country? After all, shareholders expect their company to earn money. And where is it better to teach the lesson of capitalism to the thousands of business students that the University trains every year. No, this is at best an assault on an industry, an industry that is the primary method for most of our citizens to earn a degree. Who else caters to working adults, the ones who time and circumstance kept from attending college earlier? Is it coincidence that this comes at the same time that traditional schools are moving online, to territory previously dominated by the For-profits?

It also clearly a political move. The HLC, under scrutiny by Congress for its loose regulation and hands off attitude over the years, is trying to make a point to Congress and the Department of Education about how tough it is. Instead it only looks to be inept and hopelessly misguided. If we are entering a new time of change and disruption for higher education, how can such incompetence exist in a regulatory authority? It is bad enough to apply the rules after the fact, but it is another to CREATE the rules after the fact.

Don’t the Boards of Devry, Kaplan, Strayer, EDMC and all the rest have obligations to their shareholders as well as to their students? Where in any enabling legislation or statute is the HLC delegated the power to CHANGE CORPORATION LAW? If the University of Phoenix does not serve its students well it will lose in the marketplace, the central determinant of our economy and cultural foundation of a capitalist democratic society.

Of course there are problems in the world of Higher Education. The University of Phoenix, as well as all other universities, are working as hard as they can to resolve those problems for the benefit of students. Why does the HLC insist on becoming part of the problem rather than part of the solution?

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