| posted by Joe Hice |

One NC State competitor spent $275 million last quarter to market their university!

I had the opportunity to speak to the team at DELTA, NC State’s Distance Education and Learning Technology Applications group, last week and answer questions about the university’s efforts to create a strategic communications plan.

DELTA has played an active role in the planning process and they clearly understand the changing climate of higher education today.  Be that as it may, I think more than a few were shocked when we talked about the money “for-profit” institutions are spending to market their degree programs and classes.

For the three-month period ending Nov. 30, 2009, University of Phoenix’s Apollo Group holding company spent $275 million on “selling and promotional” expenses according to a report in The Chronicle of Higher Education.  That’s not a typo.  That’s $275 million ($275,000,000) last quarter.

Holy cow.  University Communications won’t spend that much marketing NC State during the next 300 years given the current budget situation.  Let me say that in another way, it will take NC State almost 300 years to spend what the University of Phoenix spent last quarter (that’s just three months) marketing itself to potential students.

I hope that number scares you as much as it scares me and I’ve been afraid for a few years now.  My eyes were opened when the University of Florida football team played for a BCS National Championship — and won — back in 2006.

The stadium in Glendale, Arizona is named the University of Phoenix Stadium.  Makes sense, right.  University of Phoenix must be close by.  Well, Apollo Group Inc., is based in Phoenix, but the stadium is not part of a physical campus; at least not as we think of a campus.  It’s a marketing tool used to promote the University of Phoenix.  Apollo Group paid $154 million for the 20-year naming rights!

PhoenixStadium

I wonder how many millions who watched that game assumed the University of Phoenix is a “real” university.  I wonder how many millions of people who watch the Phoenix Cardinals play their home games, watch the Fiesta Bowl, or who saw the Rolling Stones in concert there, assume the same.

But the University of Phoenix is a real university, it’s just different.  It has adapted to a changing world and now has almost 40 campus locations around the globe and 455,600 students.  Just 15 years ago the University of Phoenix had 25,100 students.

The University of Phoenix is the second-largest higher education system in the country, behind only the State University of New York.  And it’s growing at a rate of about 9 percent a year, compared with only 1.5 percent a year for all institutions.

At my old job and here at NC State, some faculty don’t see places like University of Phoenix as real competition.  “You just don’t get the same experience attending Phoenix as you do attending NC State.”

No, what you get is a different experience and an experience that has impressed 455,600 students.

An experience we all have to take into consideration as we’re planning the future of NC State.

Passion Rules!

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10 Responses to “One NC State competitor spent $275 million last quarter to market their university!”

  1. keith nichols says:

    their tv spots tout their largest business school, small class sizes, innovation, etc. sound familiar?

  2. Jane Albright says:

    I’m not feeling the fear. But please don’t put me in the same group as faculty! Phoenix is filling the need of adult learners who’d rather not return to the classroom. Has NC State ever advidly targeted this group? Is Phoenix’s growth contributing to the decline of NC State — or any other traditional university? I don’t think so. It’s a whole new market. Of course Phoenix has to spend $225 million to create something out of nothing. We could spend that if we didn’t have buildings or labs or staff or the Wolfline. And then we wouldn’t have community. We wouldn’t conduct world-class research or contribute to the econoimc development of our state. At least Phoenix is contributing to declining ad revenue.

  3. Joe Hice says:

    Phoenix will generate about $5 billion in sales this year. That’s $5 billion in classes. That’s $5,000,000,000. With that kind of income how long will it be before they start doing research on their own as part of their marketing and sales strategy. How long will it be before they buy the best and brightest in a chosen field and “own it.” And when you’re providing an education — a higher education — to almost 500,000 individuals, they are making an impact on the economy of our state, our nation.

    The experience at Phoenix, Kaplan, DeVries and others is not the same as the experience at NC State. It’s just different.

  4. Joe Hice says:

    In-depth story here about lots of legal concerns and ethical questions about operations at the University of Phoenix:
    http://www.propublica.org/feature/at-u-of-phoenix-allegations-of-enrollment-abuses-persist-1103

    To be fair, not everyone is convinced that Phoenix University is following acceptable business practices. The Apollo Group paid some $10 million to resolve allegations from the U.S. Department of Education investigation that found U of P was inflating its enrollment by signing unqualified students, and now the for-profit corporation says it has put aside $80 million to settle another lawsuit over new allegations that are similar to those in the 2004 investigation.

    According this story, the University of Phoenix is the single largest recipient of federal student aid in the country– $3.2 billion last year. Lots of students being pressured to enroll with false claims, promises about degrees, and unethical practices.

  5. Jane Albright says:

    Just how seriously to deal with the issue of for-profit universities will be made at a much higher pay grade than mine. From a communications aspect at NC State, however, it seems to be problematic. As more than one internal study found, State suffers from an inferiority complex — unjustified, in my opinion, but there it is. Spending too much time and effort worrying about institutions that accept students without even a GED, where only 27 percent graduate, would feed into that. Why bother worrying about these inferior institutions? I prefer the point of view: “They had to spend $225 million in one quarter, obviously desperate for attention. With that kind of money, State could provide XX sholarships to deserving students, open a cutting edge center for online education options, etc. etc.”

  6. Dave Green says:

    Here’s a consumer protection web site with numerous complaints and class action lawsuits against the University of Phoenix. Interesting reading.

    http://www.consumeraffairs.com/education/phoenix.html

    Lots of pressure on students to sign up for classes and apply for federal financial aid. Once in, students report lack of academic support, difficulty in having calls returned, surprise charges.

    I think all concerned would be far better served by the local community college system.

  7. Lee Sartain says:

    Joe you make some excellent observations in your article. In fact, the former CIO of the UNC System, Robin Render obtained her Masters degree from University of Phoenix.

    From a communications perspective it almost begs the question of our needs to be dual tracked as a land grant institution. There are certainly immediate benefits to universities that embrace the “here and now” payouts moving to a distance learning environment can offer. East Carolina for instance far and above crushes NCSU and UNC’s offerings in distance education.

    However, on the flip side, going on your most recent article on advancement…students in those programs aren’t loyal alumni and givers. For Phoenix this isn’t an issue, they aren’t eligible for federal grants, and as a for-profit, needs are met in the here and now.

    For NCSU the challenge is different. How do we meet our land grant challenges that face our NC constituents, while at the same time create more intentional community with our traditional students and increase lifetime institutional loyalty to the university for life.

    Just some thoughts.

  8. Dave Green says:

    Last link about the woes at the University of Phoenix–promise.

    http://www.complaintsboard.com/bycompany/university-of-phoenix-a8989.html

    This link includes “tell-alls” by ex-staffers as well as numerous documented fraud cases. Difficult to understand why anyone would enroll and how the Univeristy of Phoenix is still operating.

  9. Joe Hice says:

    I think one of the key learning’s from Phoenix is that it’s okay to think different and look at higher education in a different light. That doesn’t mean we should move away from our roots, but look to expand the root system. With about 3500 “competitors” we’ll never be able to differentiate ourselves if we continue to think and do the same things. I believe Randy Woodson will help establish a new direction for NC State. A direction that pays homage to our roots, but that explores new ideas and practices across the board.

  10. Jason says:

    I work at University of Phoenix as an Enrollment Counselor and I am also a student here. This article was passed on to me by a co-worker, which obviously caught my interest. I’m going to try to be as non biased as possible in what I say here Joe and others… The facts that you state are true, we do spend allot of money on marketing and enrolling new students, I enjoyed the read. That is exactly right, we do target a different market. A working or family oriented adult that is not able to go to a ground campus.

    To address some of the bloggers on here, not to defend but enlighten. I talk to 20 students a day about getting into school, realistically I probably enroll 6-9 students per month. There is no deceptive practices that the university teaches nor do counselors mislead about financial aid. Of course there is a bad egg in every basket, but the moral and ethics of the university are where they should be.

    I would say the biggest problem is students come here and they think they are getting a degree and not going to have to put in any work into it. That is far from the truth, not only as a counselor, but a student too. Yes, there are probably some un qualified students that apply, but some just need a chance that other colleges aren’t willing to offer. What happens is a student gets qualified for financial aid starts class, realizes that it is going to take some work and either fail or drop out. After that, the student FA is returned to the lender and the student is responsible to pay the debt to the school. Then the university is bad, we misled people, we stole their financial aid. I will tell you from personal experience that most of the complaints are this exact same instance and it couldn’t be further from the truth. Does the university have areas of opportunity, yes, we all do. However, I believe the band wagon on this bashing has been blown out of proportion. Go to the BB and actually see how many claims are actually legitimate claims. University of Phoenix scores an A-, weird, isn’t it?

    If we are doing such bad business, why is the Higher Learning Commission accrediting our institution, why is the federal government providing financial aid, and why are we the largest private university in the country with 450k+ students? All valid questions to ask right? We had a local journalist that just loved to bash us, but only went of what she had saw from articles such as the ones above. This journalist ended up attending the college

    To be honest with you University of Phoenix has changed my life. Not only in my working career, but in furthering my education while holding being able to hold down everyday life. Not too many people that work full time and have kids have the luxury of dropping all their responsibilities to go to a ground campus full time. Look at this from that perspective and not of the perspective of an 18 yr old student that has no responsibilities and is able to go to a ground campus full time. What’s better for you now?

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