Governance and Decision Making





Getting an education in learning over the Internet

Submitted by: Dr. Cronin


Getting an education in learning over the Internet

By David Lazarus

November 2, 2010

Like any good dad, I see it as my responsibility to prepare my son for whatever life may throw at him, whether that means knowing how to solve a math problem or knowing how to field a grounder.

One thing I haven’t been able to teach him, though, is how to kill a rampaging Bowser in Super Mario Galaxy 2. Video games just aren’t my thing.

For that, my son, who is 9, turns to octaneblue.

Octaneblue is the nom-de-Net of a guy who posts videos of his gaming, along with play-by-play commentary, on YouTube. Watching octaneblue in action, my son has rapidly learned how to advance in the various Super Mario games he plays on the Wii, and in turn his enjoyment of the games has grown.

This has given me a newfound appreciation for the merits of online education, or “distance learning,” as some call it. In the past, I’d tended to think of online courses as a second-rate form of academia — virtual classes for virtual students.

I was wrong. There’s clearly enormous merit to the Net as a teaching tool, especially for subjects where it’s better to show than to tell.

But does that mean distance learning can replace classroom instruction?

“Not exactly,” said Vicky Phillips, chief executive of, a website that rates and ranks online colleges. “There are some things you can’t do as well online, such as nuclear physics. You’d need a lab or a reactor for that.”

But for many if not most subject areas, she said, online education can complement classroom instruction and help people manage increasingly busy schedules.

These days, Phillips said, about 12,000 different degrees can be obtained online from accredited U.S. universities. The number of degrees available has grown by double digits annually for the last five years.

“You can even learn mortuary science online,” Phillips said.

A recent report by the U.S. Department of Education found that “students in online conditions performed modestly better, on average, than those learning the same material through traditional face-to-face instruction.”

Michael Lambert, executive director of the Distance Education and Training Council, a nonprofit accreditation agency for online learning, said he expects the number of students taking cyber-courses to surpass those in traditional classrooms within the next decade.

“We won’t ever replace campus study in this country,” he said. “It’s just too entrenched and too useful. But that type of education will become the minority.”

While it’s hard to imagine future doctors attending medical school online, or budding scientists conducting virtual experiments on their computers, I get what the experts are saying. For many subjects, you can’t beat the ease and convenience of education via computer screen.

I learned how to carve a turkey online. My wife learned (on a dare) how to do the macarena. The University of YouTube has something for everyone.

Pick a subject. I can pretty much guarantee you’ll find a how-to video online. Auto repair? No problem. Dog training? Yup. Cooking classes? Home Ec will never be the same.

And that’s why I got interested in finding octaneblue. Here’s a guy whose YouTube channel has almost 8,000 subscribers. His videos have been watched nearly 14 million times.

He’s a Jedi master of the video game world. And my son is now one of his devoted disciples.

Octaneblue, it turns out, is not an easy man to reach. All he reveals on YouTube is that his first name is Jon and that he’s 23. Aside from those tidbits, he’s very protective of his privacy.

But after a few hours of firing cyber-flares into the Twittertown and blogospheres, I finally induced octaneblue to break cover and make contact.

He declined to have his full name in print — “Call me octane,” he said. He revealed only that he lives in a suburb of Baltimore and is pursuing a business degree at a community college. He works part time at an electronics store. He plays video games about 15 hours a week.

Octane was complimented that my son has learned so much from his videos.

“I never intended to help people with games,” he said. “This was just something I thought would be fun, uploading videos on YouTube. But I notice that people watch how I get through levels and then they re-create what I do.”

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Although there are thousands of gaming videos online, octane attributes his success to the fact that he plays popular games and to the commentary that accompanies his action — a personable, often self-deprecating, occasionally curse-laden narrative of what he’s thinking as he traverses the game world.

He’s knowledgeable, engaging and enthusiastic. He is, in other words, a natural teacher.

And his lessons are available free to anyone with an Internet connection.

I asked octane what he planned to do after he gets his business degree. Will he try to turn his passion for video games into a livelihood?

“It would be cool to turn this into something profitable,” he replied. “But it’s just something I do for fun.”

In other words, octaneblue will have to turn back into Jon, and he’ll have to get a real job some day.

That’s a lesson I’ll have to get around to teaching my son at some point.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to

Results of State Referenda Related to Higher Education

Submitted by: Renee Hirschberg


Results of State Referenda Related to Higher Education

Voters in a dozen states weighed in on ballot measures on Tuesday that could affect higher-education policy or colleges’ bottom lines.

Please click on the above link to view the chart.

Republican Gains in Congress Could Temper For-Profit Inquiry and Lead to Spending Cuts

Submitted by: Renee Hirschberg


November 3, 2010

Republican Gains in Congress Could Temper For-Profit Inquiry and Lead to Spending Cuts

By Sara Hebel and Kevin Kiley


The gains Republicans made in Tuesday’s Congressional elections bode well for for-profit colleges, who are hoping for some respite from a harsh federal spotlight. They are also likely to lead to more-austere budgets on Capitol Hill, possibly resulting in spending cuts for student aid, research, and other higher-education priorities.

Republicans were on track to pick up dozens of seats from Democrats in the U.S. House of Representatives as of late Tuesday, well more than they needed to gain control of the chamber. In the Senate, Republicans also gained some seats previously held by Democrats but fell short of the margin they needed to win the majority there.

The results are, in part, a rebuke of President Obama, including among members of the Millennial generation. Young voters, who overwhelmingly favored Mr. Obama in the 2008 elections, have been growing increasingly uninterested in the midterm elections and increasingly dissatisfied with the work elected officials are doing, according to results of a recent poll by Harvard University’s Institute of Politics. Only about one in four of eligible voters under the age of 30 who were surveyed for the Harvard poll, released last month, said they would “definitely be voting” in the midterm elections, a drop of nine percentage points from a similar poll conducted a year ago.

Young adults, under age 30, represented between 9 percent and 10 percent of all voters in Tuesday’s election, down from 12 percent in the last midterm elections, in 2006, according to preliminary exit poll data provided by the Center for Information and Research on Civic Learning and Engagement. The group said late Tuesday that it could not yet estimate, though, whether the percentage of young people who voted actually rose, fell, or stayed the same, compared with 2006.

The large number of new members of Congress creates uncertainty about the direction higher-education policy will take over the next two years, with lobbyists saying they don’t know much about many of the newly elected individuals’ views on college issues. The lobbyists said they are unsure of what Republicans’ priorities will be on higher education, how likely they are to follow through on plans to cut spending, and how much either party will be able to accomplish in a divided government.

Shift in For-Profit Debate

The outcome is expected to have a more-immediate effect on the fight over for-profit colleges than on any other federal higher-education policy debate. Having reclaimed the House of Representatives, Republicans could block bills aimed at for-profits and attempt to overturn the administration’s proposed “gainful employment” rule, which would penalize programs whose graduates carry unmanageable levels of debt. Republican leaders have said they want to focus on scrutinizing the outcomes and costs of all types of colleges, not just those in the for-profit sector, shifting attention from problems at proprietary institutions alone to issues facing higher education as a whole.

Yet even the most sanguine of the sector’s supporters acknowledge that the Republican takeover of the House won’t be a panacea for for-profit institutions. Since Democrats have held onto the Senate, they can continue their investigation into for-profit colleges and thwart any Republican effort to overturn the expected gainful-employment rule.

Harris N. Miller, president of the Association of Private Sector Colleges and Universities, which largely represents for-profit institutions, said he has been less worried about which party controls Congress than he has been focused on how to win the support of the dozens of new legislators who will be coming to Washington.

Having so many new members presents a good opportunity for for-profit higher education to gain support in Congress, Mr. Miller said. In the past few election cycles, freshman representatives have tended to be more receptive to proprietary institutions than have longer-serving members, who remember the sector’s problems in the 1980s and 1990s, he said.

“Those members are going to come in without some of the misconceptions and biases,” Mr. Miller said of the freshmen.

David S. Baime, senior vice president for government relations at the American Association of Community Colleges, said some officials are worried that community colleges will be in the line of fire if Republicans expand the Democrats’ probe into for-profit colleges to all of higher education.

Community colleges have been criticized for their graduation rates, which are lower than those of two-year, for-profit colleges. But Mr. Baime and others have said that policy makers should not use the same measurements to compare for-profit colleges, which tend to offer a large number of certificate programs, with community colleges, which award many associate degrees.

“Higher education across the board is anxious about having a lot of new outcome standards,” Mr. Baime said. “But we stand by our performance.”

Republicans’ Pledge to Cut Spending

House Republican leaders have laid out some specifics about how they plan to govern. In a “Pledge to America” they unveiled this fall, they vowed to cut government spending to 2008 levels and cap growth of new money for domestic programs. Republicans said they would save at least $100-billion in the first year of their plan to roll back spending. The only programs specifically exempted in the plan benefit seniors, veterans, and U.S. troops.

John A. Boehner, the House Republican leader who is poised to become speaker of the House, said when he announced the pledge that it “offers a new way forward” for the country. The plan would cut spending rather than accelerate it, he said, and put more power “in the hands of the people” by reducing the size of government. “These are the solutions American people are demanding,” said Mr. Boehner, who won reelection in his Ohio district by a wide margin.

The document does not specifically touch on higher education, but its budgetary provisions could lead to less money for federal research, student aid, and the National Endowments for the Arts and the Humanities, among other college priorities. Some higher-education leaders fear a return to the battles of the 1990s, when Republicans sought to eliminate federal money for those endowments.

But spending on Pell Grants, college-preparatory programs, and science has consistently received strong, bipartisan support in Congress. So some advocates of those programs say they are optimistic that Republicans might still spare those areas from their budget cuts, or that Democrats in the Senate would be able to beat back any efforts to reduce those programs’ funds.

Mr. Boehner, who was first elected to Congress in 1990, brings to his leadership role significant higher-education-policy experience from his five years as chairman of the House education committee earlier this decade.

In that role, Mr. Boehner oversaw debates about renewing the Higher Education Act. While the law wasn’t reauthorized until 2008, after Mr. Boehner had left the committee, the discussions showed him to be a friend of for-profit colleges and student-loan providers.

During those debates, Mr. Boehner pushed for eliminating a distinction between proprietary and nonprofit institutions that would have allowed for-profit colleges to receive millions of dollars in federal funds reserved for minority-serving institutions. And he called for eliminating the rule that prohibits for-profit institutions from getting more than 90 percent of their tuition revenue from federal student aid.

Mr. Boehner also worked to counter proposals by Democrats to expand direct lending.

Those positions put him at odds with the Obama administration and many Democrats in Congress, who are pursuing tighter regulation of for-profit colleges and who pushed through an overhaul of federal student loans this year that largely cut private lenders out of the federal student-loan system.

While Mr. Boehner’s positions on higher education are fairly well known, those of the man who is in line to fill his former spot as chairman of the House education committee are more of a mystery. Rep. John P. Kline Jr. of Minnesota has served as the top Republican on the committee for just over a year and has had little involvement with higher education in his time on the panel.

For-profit colleges, though, count Mr. Kline as a strong ally, and he opposed the changes Democrats made in the student-loan program this year. He has said he is against measures that would increase regulations and generally favors a limited federal role in higher-education policy.

“Washington does not always know best,” he told The Chronicle shortly after he became the committee’s highest-ranking Republican.

Timothy H. Bishop, a Democrat of New York and a member of the House education committee, narrowly held on to his seat in a closely watched race among higher-education lobbyists. Mr. Bishop, a former provost at Southampton College of Long Island University, is familiar with the details of higher-education issues and has been very involved in them, pressing for changes in the student-loan system and advocating more scrutiny of for-profit colleges. He defeated Randy Altschuler, a Republican.

A More-Divided Senate

On the Senate side, Harry M. Reid of Nevada, the majority leader, survived a closely contested race against Sharron Angle, a Tea Party-backed Republican who previously served in the Nevada legislature.

As majority leader, Mr. Reid brokered compromises that allowed the Senate to pass the bill to overhaul student lending. He also pressed for passage of the Dream Act, a measure that would provide a pathway to citizenship through higher education or military service for young people who came to the country illegally and make them eligible for some federal aid. Mr. Reid has vowed to bring up the measure again for a vote in a lame-duck session of Congress planned between now and when newly elected members take office next year.

On the education committee, Sen. Tom Harkin, an Iowa Democrat who has been leading a series of hearings that have scrutinized for-profit colleges, is expected to retain his position as chairman. He was not up for re-election this year. Had Republicans gained control of the chamber, Sen. Michael B. Enzi of Wyoming would have most likely assumed the chairmanship. As the top Republican on the committee, he has pushed to widen the committee’s exploration of for-profit colleges to question the return on investment at nonprofit institutions, too. He was also not up for re-election.

Other education-committee members, including Sens. Patty Murray of Washington and Michael F. Bennet of Colorado, both Democrats, were also in close races. As of early Wednesday, both races were too close to call. Community-college lobbyists consider Ms. Murray one of their strongest supporters.

Community-college officials also closely watched the campaign of Sen. Blanche Lambert Lincoln, a Democrat of Arkansas they considered one of their biggest proponents. She was defeated by John Boozman, a Republican.

One new Democratic face in the Senate, Joe Manchin III, has made improving college completion one of his priorities as governor of West Virginia. He beat John Raese, a Republican. Mr. Manchin, who was named chairman this year of the National Governors Association, said at a governors’ meeting this summer that, of all the pressing problems facing state leaders in this tough economy, none is more important than improving the number of students with a college credential.

“We’re facing a generation of students that is projected to have lower educational attainment than their parents’,” Mr. Manchin said, calling the statistic “alarming.”

Looking ahead, college advocates say they aren’t sure what to expect from a divided government and whether split control of Congress will lead to stubborn impasses or force pragmatic compromises.

“It depends on how the leadership reads the outcome,” Mr. Miller said. “If what they’re hearing is that people want less government and gridlock, then that’s what we’ll get.”

On Tuesday night, Mr. Boehner said he was ready to get to work. “This is not a time for celebration,” he said. “This is a time to roll up our sleeves, a time to look forward with determination.”

Kelly Field contributed to this article.


Is a Liberal-Arts Education Worth It?

Submitted by: Renee Hirschberg


Is a Liberal-Arts Education Worth It?

By Emily Noonan


“The College of arts and sciences, the foundation college for the professional and graduate schools and service province of them all, has a kingdom of its own and a purpose within its own high nature. This purpose toward which it has in various forms been groping for centuries is the development of the more complete human being….”

—Frank Porter Graham, Former President of the University of North Carolina-Chapel Hill

The year was 1931, but the question is still the same: Is a liberal-arts education truly worth it? Last Monday, my senior thesis adviser confronted a classroom full of Asian Studies majors with the same question. Seeing as the occupants of the classroom were all liberal-arts majors, he was greeted with at first introspection, then verbosity and indignation.

As a double major, I have lived and studied both sides of the debate. On one side of campus, I was analyzing Johnson & Johnson stock tickers, while studying Japanese pop culture on the other. Even though it has always been fairly obvious to me why learning accounting and finance might lead to a beneficial career, I admit to having my doubts about studying Tokyo Lolita fashions. A liberal-arts education may prepare you for conversation at a dinner party, but what about a job?

AFP/Getty Images Luckily, future promotions will not hinge on my ability to perform an Indonesian dance.

The argument against a liberal-arts college can be convincing for other reasons. The concept is almost nonexistent outside the United States. One of the biggest critiques is time; the modern liberal-arts education is not only costly, but time-consuming. I personally could take back one year of my life with all the general- education requirements I fulfilled my first year.

But for me all the time in general education requirements is forgotten as soon as I think of Graham’s idea of a “more complete human being.” My classes outside of the business school have provided frameworks and transferrable skills to complement the professional ones. I have learned how to think, research, communicate, persuade, analyze, run, jump and soar.

Luckily, future promotions will not hinge on my ability to perform an Indonesian dance for the board room, but I aspire to have a job in which I can put these concepts and cultural-understanding elements to use. As I prepare for my first interview next week, I’ll be thinking more than ever about how I can validate the value of my education in the real world.

For Exposure, Universities Put Courses on the Web

Submitted by: Jackie Boyle


For Exposure, Universities Put Courses on the Web

Published: November 1, 2010

LONDON — Until recently, if you wanted to take Professor Rebecca Henderson’s course in advanced strategy to understand the long-term roots of why some companies are unusually successful, you needed to be a student at the Massachusetts Institute of Technology, where Ms. Henderson teaches at the Sloan School of Management. Admission to the Sloan School is extremely selective, and tuition fees are over $50,000 a year.

For the past two years, though, anyone with an Internet connection can follow Ms. Henderson’s lectures online, where the lecture notes and course assignments are available free through M.I.T. OpenCourseWare. Why give away something with such a high market value?

“I put the course up because the president of M.I.T. asked us to,” said Ms. Henderson. “My deep belief is that as academics we have a duty to disperse our ideas as far and as freely as possible.”

Mary Lou Forward, executive director of the OpenCourseWare Consortium, a worldwide organization of about 250 academic institutions around the world, adds that universities get “global engagement” from posting courses online.

There are also “recognition for individual faculty members who may be well known within their disciplines but not outside them,” Ms. Forward said, and what Ms. Henderson calls “first mover advantage.”

M.I.T.’s announcement in 2001 that it was going to put its entire course catalog online gave a jump-start to what has now become a global Open Educational Resources Movement whose goal, said Susan D’Antoni of Athabasca University, in Canada, is “to try to share the world’s knowledge.”

Harvard, Yale, Stanford and the University of Michigan all now offer substantial portions of their courses online. In Britain, the Open University, which has been delivering distance learning for over 40 years, offers free online courses in every discipline on the OpenLearn Web site; the Open University also maintains a dedicated YouTube channel and has often had courses listed on the top 10 downloads at iTunes University. There, students can gain access to beginner courses in French, Spanish and German as well as courses in history, philosophy and astronomy — all free.

Most OpenCourseWare is in English, but its Web site offers courses in Chinese, Dutch, Japanese, Russian, Spanish and Hebrew. The African Virtual University, based in Nairobi, has produced education courses for science and math teachers in English, French and Portuguese.

Much of the early work on Open Education was financed by wealthy universities or foundations, especially the William and Flora Hewlett Foundation, whose mission includes using “technology to help equalize the distribution of high quality knowledge.”

But relying on philanthropy is not sustainable. Ms. D’Antoni, who followed the movement’s explosive growth in her former job at the International Institute for Educational Planning, part of Unesco, said the initial focus was getting educational material onto the Web. “The big problem then was copyright — getting legal permission to use things,” she said. “Now there is all this material. But who is using it, and what are they doing with it? And who is going to pay for it?”

At least a partial answer to those questions — and a sense of where Open Education is going — should become more apparent this week, when hundreds of educators, academics, computer scientists, artists and at least a few hackers gather in Barcelona for two meetings that might be said to represent the two wings of the movement.

One event, Open Ed 2011, is the seventh-annual meeting of a group that began as an educational offshoot of open-source software, which allows users to alter, change or improve computer programs freely and to distribute the results without charge. Open Educational Resources, the term adopted by Unesco in 2002, makes course content and on-line learning tools available without cost over the Internet to users who are similarly free to adopt, improve or redistribute them.

Open Ed 2011 is being held at the CosmoCaixa, the science museum in Barcelona, and organized by the Open University of the Netherlands, the Open University of Catalonia and Brigham Young University. The gathering is for researchers, academics and administrators “who wish to learn about the institutional decisions needed to make open education a reality.” The theme this year is “impact and sustainability.”

Meanwhile, at the Barcelona Museum of Contemporary Art, “edupunks, hackerspaces, creative commoners, radical librarians and Wikipedians” at the Drumbeat Learning Freedom and the Web Festival will assemble for “three days of making, teaching, hacking, inventing and shaping the future of education and the Web.” The Drumbeat festival is organized by Mozilla, the nonprofit foundation that owns the makers of Mozilla Firefox, the open-source Internet browser. The festival has political and educational ambitions.

“There’s a lot of overlap,” said Ms. Forward, the executive director of the OpenCourseWare Consortium, who plans to attend both gatherings. Ms. Forward, a former dean of African studies at the School for International Training in Brattleboro, Vermont. Ms. said that for her, “questions of unequal access” to education were the most pressing. “What I think about all the time,” she said, “are ways to bring education to people.”

Mark Surman, executive director of the Mozilla Foundation, said applying Mozilla’s resources to the problems of education “fits in a couple of ways.”

“We have an instinct that as the Web affects society, those parts of society can also affect the Web,” he said.

Mr. Surman describes the Open Education movement as having three pieces: “There’s the content piece — can I get the material? And the pedagogy piece — what are the ways we can teach each other using the Web? How can we make this better for learners and teachers? And finally there’s the question of accreditation and certification.”

This has been a sensitive subject for the movement. One reason M.I.T. decided to “give away” its courses, Ms. Forward said, was “we didn’t think we could replicate the quality of a student’s experience on campus.”

M.I.T. students can use OpenCourseWare courses to get a feel for a subject or an instructor, while students at other universities can use them to supplement their own courses. “If you’re taking a course on Pompeii, and you want to know more about volcanoes, we have a course for that,” Ms. Forward said. But while OpenCourseWare students attend the same lectures, and take the same tests as M.I.T. students do, they do not get M.I.T. credit, or an M.I.T. degree.

At the Open University, where the model is not a selective one, their OpenLearn courses are designed to offer a gateway to enrollment. So far, the experiment seems to be working, with some 6,000 students from the free courses going on to enroll in fee-paying courses.

But as a public institution, the Open University also has a mission to disseminate its content as widely as possible. In the past, this meant that science lectures were broadcast on the BBC, often in the middle of the night. While the Open University still produces science programs, these days you are more likely to find the Open University on YouTube, where Andrew Law, the university’s director of multiplatform broadcasting, stars in “Head Spin,” a film about optical illusions.

Some students at the African Virtual University do pay tuition, said Bakary Diallo, the university’s rector. “Education has costs, and someone has meet them,” he said. But in work financed by the African Development Bank, the university has also produced 33 modules in math, chemistry, physics and biology for use in training teachers under the creative commons model that can be available almost anywhere in the world.

“This is a pan-African institution,” Mr. Diallo said, “and now Africa is contributing to global knowledge.”

Pushing back: Bial discusses limits of conventional wisdom on achievement

Submitted by: Alicia Belair


Pushing back

Bial discusses limits of conventional wisdom on achievement

By Elizabeth Gehrman

Harvard Correspondent

Thursday, October 28, 2010

The Posse Foundation may sound like something out of the Wild West, but it’s actually a unique nonprofit that helps promising but economically disadvantaged kids to prepare for and then succeed in college, in part by strengthening ties with their college-bound peers, or “posses.” Since the organization’s founding in 1989, it has helped more than 3,000 students get into and graduate from top-tier universities.The group’s founder, Deborah Bial, Ed.M.’96, Ed.D.’04, spoke on “The Politics of Race and Class in Higher Education” at an Askwith Forum on Tuesday (Oct. 26) to a crowd that included current Posse students, who continued the discussion during an impassioned question-and answer period.

“What is smart?” she began, showing slides of luminaries from Einstein and Al Sharpton to Mother Teresa and Marilyn Monroe.

“Whether you think each of these people is or was smart is really not important,” she continued. “For sure we know each of these people is successful.” In this country, she added, we think “smart connects to success,” and education connects to smart.

But so many people who are smart don’t show up in the measures we use to judge academic performance, Bial said, and those people are disproportionately black, Latino, or poor. She spent much of her lecture discussing who “deserves” to get into good schools in a nation that considers itself a meritocracy in which “we have a system that allows those who deserve it to succeed and move ahead.”

With admissions systems based on grade-point average, school ranking, and test scores, not everyone is on a level playing field. The statistics are not new, but bear repeating. While fewer than 9 percent of whites live below the poverty level, about a quarter of African Americans do. The unemployment rate for whites is about half that of blacks and two-thirds that of Latinos. Though the national high school graduation rate is 71 percent, it drops to less than half that in low-income urban school districts such as Indianapolis. White students receive 72 percent of the four-year college degrees in America, though they make up only 65 percent of the population.

“Now we’re going to add standardized tests,” she said. “You know, we really can’t put enough barriers in the way.” Many top-tier schools, she said, only consider students with SAT scores of 1,200 and above, a standard that lower-income students rarely meet, despite the success many go on to have later in life. Because selective institutions recruit their executives from top-tier schools, a “good ol’ boys” network has persisted in which more than 90 percent of highly placed executives are white.

“There are initiatives under way to close the gaps,” Bial said. “But too often they define themselves by the deficiencies of the populations with which they work,” and as such, they “unintentionally creature further racial divisions.”

She gave as an example a new National Merit Scholarships program, the National Achievement Scholarship. “We still end up with two programs,” she said. “One called ‘merit,’ one not called ‘merit.’ Diversity should not be a synonym for minority.” We need to expand our definition of merit, she said.

“What do we do to ensure that people from all walks of life, from all backgrounds, get a chance to pursue the American Dream?” Bial asked. “Every segment of society has to do its part. Our politicians have to pass laws. Our entrepreneurs have to innovate. Our business leaders and foundations have to fund. Our community leaders and activists have to speak out. Our institutions of higher education have to be in the mix. . . . They have to broaden the way they see who is deserving.

“We have to fix K-12,” she concluded. “But we can’t let generations slip through the cracks while we’re waiting. These kids are out there. They’re ready. They’re hopeful. And we can’t let them down.”

The Askwith Forum was sponsored by the Harvard Graduate School of Education.

Jay A. Halfond: Six unsettling observations on for-profit colleges

Submitted By: Erin Mooney



Jay A. Halfond: Six unsettling observations on for-profit colleges


09:49 AM EDT on Friday, October 29, 2010




The nation seems to have suddenly awoken to the reality that for-profit academic institutions are a force to be reckoned with. For so long, they have been ignored as inconsequential, second-rate competition, and vilified for their greed and lack of quality. Two events seemed to have changed their image into something far more formidable: the realization that government-sponsored financial aid goes disproportionately (and with dangerously high default rates) to the for-profit sector, and the excellent exposé on “Frontline” (“College, Inc.”) that slammed the aggressive recruiting practices of these schools.

There is much hypocrisy as newspapers, themselves for-profits, and the politicians who previously promoted the development of more storefront enterprises in their own districts, now question the fundamental ability of for-profit universities to deliver higher education — and “not-for-profit” universities now feel the threat of this competition. This is not to say that for-profits haven’t been guilty of excessive behavior, but they operate in a much larger academic ecosystem, which needs to be acknowledged. I offer these five uncomfortable observations.

First is that the for-profits fill the void relinquished by the rest of us. A case in point is the University of Phoenix, which began in the 1970s as a small for-profit program aligned with the Jesuit University of San Francisco, then moved to Phoenix to escape the scrutiny of the California accreditors, and slowly morphed from a bricks-and-mortar enterprise to mostly online in just the last decade. At no point did the University of Phoenix invent anything especially new, discover something that wasn’t otherwise obvious, or unearth a market that was being systematically neglected by the mainstream educational establishment. I recall asking a senior administrator at an urban flagship state university on the East Coast why Phoenix was able to develop such a successful presence there. She replied that the business school faculty at her university were not interested in teaching part-time adult students and simply surrendered that market to the for-profit.

Second is that the for-profits make the equivalent of hamburgers, and sell them in large quantity to a mass market — nothing exotic, nothing even especially novel or risky. Credit for every academic invention should go to highly acclaimed universities. The for-profits simply took those innovations and turned them into commodities, and high-priced ones at that. While originality, creativity and academic imagination reside in the nation’s most prominent universities, the will and the way to cast a wide net for students exists in the for-profit world, which produced major marketing machines. The numbers are staggering: The four largest companies/universities have a combined head count of more than one million students and annual revenues of $11.7 billion. Their stocks, though, are plummeting under the pressures to reform.

Third is the painful reality that the for-profits are not so different from the rest of us. All major colleges and universities engage in glitzy self-promotion, student recruiting and assistance with procuring federal financial aid. We try, however, not to cross the line into misrepresentation and manipulation. What was portrayed on “College, Inc.” occurs in the nonprofits as well, just, one hopes, less aggressively and deviously.

Fourth is the simplistic backlash that anything for-profit is inherently evil and any association between a nonprofit and a for-profit is inevitably corrupting. The more nuanced question is how to divide the labor and determine a legitimate space for the profit motive. For example, few colleges, other than Cornell University, make their own ice cream — this is something easily outsourced. But we do make our own education, which shouldn’t be subcontracted to an outside vendor. There are fundamental skills and defining features of our institutions that simply cannot be compromised or confused by outsourcing. While a partnership of for-profits and nonprofits, in so many domains, is inevitable, where the line is drawn between the two is not.

For-profits are now enormous and here to stay, though perhaps humbled and constrained by the barrage their reckless behavior inspired. We now need a détente rather than a blanket and universal rejection or a see-no-evil approach between mainstream academe and this emerging giant. But the traditional universities and accrediting bodies need to reassert their say over what is educationally credible.

Fifth is the dangerous convergence, in the public’s perception, of distance learning and for-profit corporations. Distance learning is not the exclusive domain of the for-profits, most of which developed first in the conventional classroom offered at convenient sites. And prominent universities should not shy away from online learning for fear of guilt by association. Quality online learning is often lost in the schlock being peddled to the naïve consumer. There are important opportunities, if not a responsibility, to embrace the role that technology can play in providing powerful educational options for adult learners. These shouldn’t be stigmatized because of the mass marketing of online programs by for-profits or the mistaken notion that distance learning and the profit motive are somehow synonymous. I am concerned that important, laudable online initiatives might become collateral damage of the front-page exposés on for-profit mischief.

And now a sixth observation, perhaps more of a prediction: We ain’t seen nothing yet. While legislators wring their hands on how to get the genie back in the bottle, the for-profits are moving quietly and imperialistically throughout the world where the fine distinctions between for-profit and nonprofit are less clear. At some point, U.S. institutions will wake up to an even more glaring case of neglect — and find the for-profits have gobbled up the global marketplace with their version of U.S. higher education.

Jay A. Halfond is dean of Metropolitan College and Extended Education at Boston University. This comes via his permission and that of the New England Board of Higher Education, on whose Web site ( it first appeared.

University of Phoenix Article for Class Reading (Re-post)

The Rising of Phoenix, and What It Means for Higher Education


(Article requested by the editor, JOURNAL OF EDUCATION, Boston University, December 2005)

Click here for Word version

Joseph M. Cronin and Patricia M. Bachorz, Boston University

Academic leaders are not sure how to deal with for profit universities, especially those that offer degrees online.  One perspective is that they may disappear, victims of criticism, fraud and abuse.  However, thoughtful analysts believe that an Internet revolution is transforming higher education in the world.  If that is true, educators had better understand the larger forces reshaping higher education.


Some people in America today still light candles at evening meals and ride on horseback. But illumination and transportation technologies changed how most people read after sundown and get around the community.  Higher education has resisted many changes, except at the edges, until now.


Higher education enjoys preserving the old ways, the academic robes, the tutorials, and the hardbound books in the library.  Change is painful and sometimes scorned. When Harvard in the 1700’s grew tolerant of Congregational dissent, a group broke away and formed Yale. President James Buchanan listened to critics of the controversial notion of agricultural and mechanics education in the Land Grant Act, which he vetoed in 1858.  Ivy League presidents in 1944 worried aloud that the Servicemen’s Readjustment education benefits (G.I. Bill) might erode university quality and selectivity.


Former Harvard President Derek Bok in 2003 warned academic decision-makers about “the commercialization of higher education”, the corporate research contracts, the aggressive athletic bowl and tournament hype, and expanded continuing education via distance or electronic learning. One concern was that electronic instruction might persuade universities to emphasize quick profits at the expense of quality face-to-face instruction. Yet, the Twenty-First Century shows no sign of waiting for higher education to respond to new markets.


The most dominant force in this new arena is the University of Phoenix, a for- profit college. For the first twenty years Phoenix offered degree programs mostly in conventional classroom spaces. However, half of the 280,000 Phoenix students now pursue their studies online.  The University of Phoenix, charging $12,000 a year in tuition, reported net income (profits) of $271 million in 2004, more money than many nonprofit colleges generate for annual operations.  The University has 239 campus centers in thirty-six states and its parent, the Apollo Group, has announced plans to expand to China, India and Mexico.


Phoenix is not yet the world’s largest university (The World Bank recognizes Turkey’s Anadolu (formerly Anatolia) University at 530,000 and the National University of Mexico may have 400,000 students) but it has moved into the ranks of the ten largest.



How did Phoenix rise so fast and so high? An ECONOMIST analysis of “The Brains Business” (September 8, 2005) identifies the four mega-trends that fuel the success of Phoenix and other entrepreneurial colleges:


  1. The “massification” of higher education, the explosion of collegiate access in the OECD countries where the percentages of adults with degrees almost doubled between 1975 and 2005 and will increase again by 2020, along with dramatic growth in China and India,
  2. The demands of the “knowledge economy” for computer literate problem solvers and information workers in every sphere of life, banking, government, healthcare and other non-profit sectors,
  3. Globalization, the “death of distance” and willingness of two million students already to study abroad, with many millions more poised to study via the Internet, and
  4. Competition, the magnetic lure of billions (the World Bank estimates $300 billion) spent on higher education each year for 80 million students worldwide. 


Among these trends, a major vital transformational force is the Internet, which has already reduced citizen reliance on telephones, newspapers and the postal service, and which is redefining higher education by making instruction available anytime and anywhere.  In the United States alone as many as three million students take one or more courses online.  Already undergraduates at traditional (“on ground”) campuses are taking some courses online, especially when a key professor is on leave and the student needs a required course to graduate.


What are the secrets behind the remarkable growth of Phoenix?  First of all, much of the early success took place in the Southwest where states could not meet the immense surge in demand for higher education.  In California, governors from Ronald Reagan to Arnold Schwarznegger declined to finance the dozen or more new university campus centers to house another 200,000 or more students.  In the area around Phoenix the Maricopa Community College enrolls 400,000 students in two year programs, far too many for the Arizona public university system to absorb.


Second, Phoenix initially decided to focus on employed students over 22 years of age. Phoenix founder John Sperling had discovered that adult students were given short shrift at many public universities.  He provided accessible formats beginning in the 1970’s that allowed students to study part-time, completing five or ten courses a year through intensive eight-week sessions. Younger students are now admitted.





Third, Phoenix does not offer sports, fitness centers, student unions, fraternities, museums, research laboratories, or alumni events.  There are no drives to increase the endowment.  The capital needed for expansion comes from investors. Founder John Sperling said, “We consider Wall Street to be our endowment.” University facilities are lean, often rented and provide parking but few other amenities.  Phoenix buys the rights to textbooks and make most of them available online.  As Arthur Levine, President of Teachers College Columbia says about older students,


“For many, college is not even the most important activity. Work and family often overshadow it. They want their college nearby and open the hours most useful to them, preferably around the clock.  They want easy, accessible parking, no lines, and a polite, helpful and efficient staff.  For the most part, they are willing to comparison shop, placing a premium on time and money.  They do not want to pay for activities they did not use or can get elsewhere.”


Fourth, Phoenix cares about students, especially student retention and persistence, ensuring that students who start a degree ordinarily complete a program. They tell online students they are expected to log on four times a week.  If they don’t, someone from Phoenix phones them to see what’s wrong and what help they need.  Most colleges do not check in with students until mid-semester warning time.


Phoenix, of course, has moved well beyond the initial western strategy.  The university has successfully applied for higher education degree licenses in three dozen states, even the presumably oversupplied Eastern states. The goal is to be both national and international.  Phoenix has been accredited since the 1970’s.


Why aren’t traditional higher education institutions rising along with Phoenix?  Actually hundreds of public and independent universities have in fact offered distance learning programs.   The University of Maryland converted overseas programs including Department of Defense course offerings to electronic formats.  The University of Massachusetts serves more than 15,000 students with online courses, and the Southern New Hampshire University (independent) a comparable number. The University of Illinois is another aggressive provider of online courses and degrees.


A few universities shot too high, aiming for the most able and affluent two percent, and found insufficient demand and revenues to offset startup expenses. Cornell and NYU launched ambitious online initiatives, but shifted them to extension departments after a few years.  However, Duke University launched a very popular blended online MBA, with some campus time required. Another sixty universities offer online MBAs, including Syracuse, Indiana, Drexel and Michigan. A Sloan Foundation report found more than a thousand universities offer online courses and degrees, although typically in just a few academic specialties and rarely across the full spectrum.







EDUVENTURES, a Boston research firm specializing in education entrepreneurship, estimates that for profit enterprises now provide 8 percent of higher education courses.  This percentage has doubled in just a few years and may double again. No field of study is exempt.  The Art Institutes offer art courses online. Kaplan, owned by the Washington POST and with investments by Warren Buffet, offers a law school education online at Concord Law School.


Why will most universities remain loyal to conventional instruction and decline to grow aggressively online?  Here are five reasons:


1. Better not bigger. The oldest and most respected colleges and universities, east coast and west, want to grow stronger, but not necessarily any larger.  Harvard, Stanford, Yale, Princeton, Georgetown, Amherst, Williams, Whitman and Wellesley are happy with the selectivity and size of the freshman class.  They usually seek more gifts and growth of the endowment, not more students.  One exception was Middlebury, which decided optimum size was 2400, up 400 students a decade ago, and that was newsworthy.  Universities such as Northeastern, once a YMCA college open to the urban workers, reduced its size by 10,000  (to 15,000) students and aims for top 100-research university status.


2. Individuals and foundations still support traditional colleges. Once only the private colleges sought donations. But since states decreased the percentage of state financial support for public universities, land grants and regional universities have successfully pursued other alumni gifts and research contracts.


3. Expectations of the upper middle class. Students, backed by their parents, refuse to live in austere dormitories and have pushed universities to build residential apartments and suites.  Universities are expected to provide a “port for every pillow” and enough electrical outlets for microwave ovens, TV, radios, DVDs, refrigerators and other appliances, just like home.  Students expect exercise bikes, Stairmasters, free weights for all (not just varsity athletes), pools, climbing walls and more. MIT and Harvard set a high standard, offering forty varsity sports.


4. The steady supply of young students is enough for most residential colleges. However, the recent dramatic growth has been of older students, three million of them, 24 to 50 years of age and older, and mostly at public community colleges. This is the group Arthur Levine says wants easy access and affordable costs, not the extras demanded by suburban families.


5. Change is not easy.  Faculties are traditionally cautious about new educational delivery systems, including technology.  Incentives to change are few. The for profit sector is agile and unfettered by faculty assemblies willing to debate an issue for a year or two.  Argosy, Capella, Walden and the Educational Management Development Corporation move swiftly when owners and managers perceive a market opportunity.  Those firms will pursue growth while older nonprofits fine-tune existing programs.



Is there anything constraining the growth of for profit educational enterprises? What are the drawbacks and challenges posed by the rapid expansion of for profit and online instruction?


1. Higher or lower order thinking. One concern is that the focus of higher education might shift from inquiry and intellectual exploration to the mere transmission of information.  However, the better online programs emphasize problem-solving, higher order cognition, and provide for group problem solving and much more feedback on papers and projects than from instructors than in some conventional college courses.


2. Penalties for overly aggressive profit seeking. Investor desires to expand enrolments and build profits may unduly pressure admissions (and financial aid) officers to emphasize quantity, not quality.  If they cut corners and award illegal bonuses as volume incentives, for profit universities will be caught and fined, as Phoenix was.  The US Department of Education alleged that Phoenix improperly raised compensation and provided trips to the most successful recruiters.  Although Phoenix objected to the allegations, the company agreed to pay a $9 million penalty and abandon any questionable employee incentive practices.


3. A less comprehensive curriculum. The least profitable fields of study, divinity, obscure languages, philosophy, may be the last to go online or never be offered at all by the for profits.  So far health, business, education, psychology and information technology are the popular offerings. However, for profit companies a generation ago taught almost every technical specialty through correspondence courses using conventional mail. The Internet has become so fast and economical that few fields of study will escape the net. The global reach of online learning may allow recruitment of enough students to make most subjects available.


4. Neglect of research. The university functions of research and public service will be influenced by technology (medical diagnostics, for example) but for profit universities may elect not to offer these important university services at all. Research is intended to create new knowledge and replenish instruction.  Of course, academic experts point out that, of 3500 American colleges and universities, only 100 are well-respected research universities (with another 100 contenders).  Even so, the great universities will continue to carry valuable and expensive responsibilities shrugged off by the for profits.


Can society benefit from the new technologies and new providers? What are the possible societal gains from online education provided by for profit higher education groups?





For profit providers will very likely meet much of the new demand for higher education required over the next ten years 2006-2016, allowing many adults the access to education that they missed for various reasons earlier in their lives. For profits will readily invest in technology, in computer facilities, and may help to meet the heightened American demand for engineers, business technologists, and teachers


Distance learning will allow millions of foreign nationals access to higher education without traveling to the United States.  Soldiers and sailors, home workers, travelers and others will have access to courses and degrees.


The new providers will show the rest of academe that teams of individuals are needed to build excellent courses: subject matter experts, course designers, animators, evaluation experts, systems integrators, breaking the medieval mold in which one scholar tries to do it all, and potentially adding quality to the learning process. The online courses will be updated every 18 to 36 months, reducing the stale syllabi that too often tranquilize young students at certain colleges.


There will always be issues of quality in higher education.  To the credit of the six regional accreditation agencies, their staffs and board members have been carefully studying distance education and for profit providers, and have shared with each other the new standards needed to assess online libraries and electronic learning.


In truth, traditional higher education is already grappling with some of the same issues addressed by for profit providers. The methods and dilemmas of responding to cost and competitive pressures are in both sectors.


More and more instructors, especially in introductory courses, will be part time adjuncts, paid poorly for their efforts, creating an academic proletariat. More than a few adjuncts will eke out a living teaching at two, three or more online universities, usually without insurance or health benefits and with limited institutional loyalty. This is happening at traditional universities as well.


Administrators will be more concerned about retention and re-enrolment as legislators, trustees and accreditors focus on this measure. At the same time the profusion of websites and blogs already multiplies the amount of public commentary about colleges and word of mouth feedback online. Traditional institutions have been paying for “branding” strategies for advertising and aggressive marketing (much of it online). This offends those who believe that education is a good unto itself, not a commodity.


What, then, of the future?   What other online challenges confront the world of universities?






Perhaps fewer buildings. The late Peter Drucker, the management prophet, once a faculty member at NYU and Claremont College, expressed the darkest view.  He felt so confident that the Internet would provide most of higher education in the future that he proposed a moratorium on building any new conventional campus facilities.  His view was that the higher education consumer demand for new bricks and mortar facilities would evaporate over the coming decades.


The cost of technology will continue to decline and the potential modes of access will increase, with Palm Pilots and Blackberries simply an omen of future learning accessories. The world is still enjoying the early stages of information retrieval, which librarians often understand better than higher educators.  The widespread use of simulations, animations, and experiments online is still in the early stages.


The typical 30-year-old student will very often prefer the convenience of Internet learning. The traditional 20-year old student will continue to take most courses on campus, but fill in requirements or take hard-to-find elective courses online.  This new practice will challenge deans and registrars at colleges that traditionally restrict the rights of students to transfer more than a few outside courses for degree credit.


The world of education will be transformed by the emergence of 15 to 20 superuniversities each serving from 150,000 to 500,000 students. Economists of higher education discussed this probability at a 1999 Princeton, New Jersey conference on the costs and benefits of technology. (See Finklestein et al.) They concluded that only the large-scale providers, many of them privately owned, would be able to achieve the economies made possible by technology.


The chances are good that these larger providers can help demonstrate that higher education can be offered for $12,000 a year rather than between $20,000 and $40,000 a year which is the range at elite private universities as of 2006.  The U.S. Congress keeps trying to contain the rising costs of higher education but the more expensive selective residential colleges keep adding the amenities sought by students and parents.  Online providers will do for colleges what Hyundai did for automobiles.


The concepts of online education and for profit providers will be accepted by the masses well before the Academy concedes any merit. Online programs and degrees will continue to grow, and get better, because consumers and accreditors will force out the pretenders.  Again, accrediting association staffs have “gone to school” to learn about anticipating  the risks of approving for profit universities and safeguarding online academic opportunities and student services. Wealthy parents will, for the foreseeable future, dismiss the online options for their children. But their employees will meanwhile request tuition reimbursement for degrees from the University of Phoenix and other providers.





The debate over electronic education and for-profit providers will continue for many years.  In higher education, asking tough questions is always appropriate. What is crucial for the credibility of higher education is that it these phenomena be researched, evaluated and discussed in a highly professional fashion.  Horse and buggy owners scoffed at the motorcar.  The academy must review, criticize, adapt and adjust to the new technologies along with alternative sources of financial support for higher education in our time.





The Apollo Group. Inc. 2004 Annual Report: 1-43.


Bok, Derek   The Universities in the Marketplace: The Commercialization of Higher Education, Princeton: Princeton University Press, 2003 


EDUCAUSE. Twigg, Carol A. Improving Learning and Reducing Costs: New Models for Online Learning. Educause Review articles, 2003.  Online at Library detail



Jeffrey Selingo, Chronicle of Higher Education, June 17, 2005 article on Eduventures Conference on Competing in Higher Education.


Finkelstein, Martin J, Carol Frances, Frank Jewett, and Bernhard Scholz, Dollars, Distance and Online Education: The New Economics of College Teaching and Learning. Phoenix, Arizona. The American Council on Education and Oryx Press, 2000


Pew Charitable Trust; Fox, Susannah, Janna Quitney Anderson, and Lee Rainie. The Future of the Internet. Pew International and American Life Project, 2005.  Online at


Sloan Foundation reports. Allen, Elaine I. and Jeff Allen, Entering the Mainstream: The Quality and Extent of Online Education in the United States, 2003 and 2004. The Sloan Corporation, 2004.  Online at


Washburn, Jennifer.    University, Inc.” The Corporate Corruption of American Higher Education, New York, Basic Books, 2005

ABC News Investigates For-Profit Education: Recruiters at the University of Phoenix

Submitted by: Renee Hirschberg


ABC News Investigates For-Profit Education: Recruiters at the University of Phoenix

ABC News Gets Answers for Student Who Claims She Was Duped by Online School

Aug. 19, 2010
Ads for online schools are all over the Internet, plastered on billboards in subway cars and on television. The University of Phoenix, with nearly 500,000 students, is the biggest for-profit college. But some former students said they were duped into paying big bucks and going deeply in debt by slick and misleading recruiters.

“I don’t want anyone else to be sucked in,” said Melissa Dalmier, 30, of Noble, Ill.

The mother of three had big dreams to be an elementary school teacher, so when she saw ads for the University of Phoenix pop-up on her computer, she e-mailed them for more information. A few minutes later, Dalmier said she got a call from one of the school’s recruiters, who she said told her that enrolling in the associate’s degree in education program at the University of Phoenix would put her on the fast-track to reaching her dream.

“[The recruiter said] they had an agreement with Illinois State Board of Education and that as soon as I finished their program I’d be ready to start working,” she recalled.

Within 15 minutes, Dalmier was enrolled. Since she didn’t have enough money to pay for tuition, she said the recruiter helped her get federal student aid. In total, she took out about $8,000 in federally-guaranteed student loans.

But just a few months after Dalmier started, she said she learned the horrible truth: the degree program she was enrolled in would not qualify her to become a public school teacher upon graduation in Illinois.

“It was an outright lie. A bold faced lie,” she said.

It’s not the first time that the controversial school, which obtains almost 90 percent of its revenues from students paying tuition from federal aid, has come under fire for its recruiting methods.

The University of Phoenix was one of 15 for-profit schools whose aggressive recruiting practices were the subject of hearings held by Sen. Tom Harkin, D-Iowa. The Government Accountability Office sent investigators to for-profit schools across the country and found that all of them were misleading potential students.

In 2004, the University of Phoenix paid nearly $10 million to the Department of Education to settle allegations that it had violated rules about its recruiting practices. The school did not admit any wrongdoing.

“I think maybe the whole orchard is contaminated,” Harkin said. “There’s a systemic problem with the system itself that needs to be addressed.”

University of Phoenix Recruiter’s False Promise

ABC News wanted to know firsthand whether what Dalmier said happened to her, would happen to us, so we sent one of our producers undercover to meet with a University of Phoenix recruiter.

Our producer told the recruiter, who was working out of an office in Houston, Texas, that he aspired to be a teacher and planned to live in either Texas or New York. The recruiter told him to enroll in the Bachelor’s of Science in Education program, and with that degree and some student teaching, he would be set.

Producer: I just want to understand clearly. I can go to University of Phoenix, do my bachelor’s degree, and 100 percent for sure I can go back to either Texas, or New York and I can sit for those exams and once I finish those exams…I can teach.

Recruiter: Then you can become a teacher. Yes. That is true. What’s your e-mail address?

Despite her assurances, the recruiter’s claim was not true. Even with successful completion of the required certification testing, a degree from the University of Phoenix does not guarantee a teaching certificate in either of those states.

When we confronted Dr. William Pepicello, president of the University of Phoenix, about the recruiter’s false promise, he said it was “indefensible.”

“It’s wrong. Can we do better? Absolutely. Do we train our people to give that kind of misadvice? Absolutely not. And we can do better, we will do better, you know, we already have some initiatives that we talked about that we’re putting in place because at the end of the day, we have to get it right.”

But this was not the first time that the university’s recruiting practices have come under scrutiny. In December 2009, after two former employees came forward and accused the university of violating federal financial aid regulations with its recruiting practices, without admitting wrongdoing the school agreed to pay $67.5 million to resolve the accusations. The two whistleblowers received $19 million in the settlement.

When asked if the 2009 settlement was a sign that “we got caught,” Pepicello disagreed.

“No, I wouldn’t say it’s proof that we got caught. I mean, it’s certainly proof that we weren’t doing as well as we could. We could do better,” he said.

Recruiter Tells Student to Borrow to the Max

The recruiter also told our undercover producer he could take out as much as $35,000 in federal financial aid to pay for school. She also said that there might even be some money left over after tuition was paid.

Recruiter: I tell students to take out the max and whatever you don’t need or you don’t use then use it [for whatever]. But it’s easier to take out more than you need and send back the excess versus you didn’t take out enough.

Producer: What are the kinds of things though? I mean in terms of like that I could use it for? I mean, what if I just…because you’re going to have to have money to walk around.

Recruiter: They don’t care. Right. They don’t. They just tell you use it for educational purposes.

Producer: And they don’t …They don’t what?

Recruiter: No one follows up. No one says, What happened to this money? You received a check for $562, where did you spend it?

Producer: It’s your business.

The university president said that there was no excuse for a recruiter to push someone to borrow to the max.

‘It’s absolutely indefensible. It is not the way that I intend to run this university,” Pepicello said.

For-Profit Universities Contributing to Financial Crisis?

Experts say recruiters who are misleading students may only be the tip of the iceberg. Students who have attended for-profit schools are defaulting on their loans at an alarming rate, which experts say may be contributing to the next big financial crisis.

At the University of Phoenix’s headquarters, the loan repayment rate was 44 percent, according to data from 2009 provided by the Department of Education; students at their Nellis Air Force location had a repayment rate of 36 percent. At the headquarters of Brown Mackie College, another for-profit school, the repayment rate was 27 percent.

Harris Miller, who heads the for-profit industry’s lobby group, told Chris Cuomo that default rates at for profit schools are comparable to other schools which service similar student populations.

Recruiters from for-profit schools obtained $24 billion in student loan and grant money for the 2008-2009 school year, according to Government Accountability Office and Senate reports.

“These schools are marketing machines masquerading as universities,” said Steve Eisman, a renowned hedge fund investor who made billions betting against the housing market, at a recent conference and during his testimony before the Senate on the for-profit sector. “I thought there would never again be an opportunity to be involved in the short side as an industry as social destructive and morally bankrupt as the sub-prime mortgage industry…Unfortunately, I was wrong.”

Though for-profits get the lion’s share of their tuition from financial aid, the default rates on loans for students who attended for profit schools are alarming. About 50 percent of the students at for-profits drop out, according to Eisman, so schools need to keep adding new students, and have to try to recruit just about anyone — even those most vulnerable in society, he says.

Eisman’s comments sparked controversy, and Miller lashed out at Eisman, calling his comparison of the career college sector to the subprime mortgage industry “silly” and “simplistic.”

Miller also said Eisman’s remarks must be considered in light of his alleged intentions as a short seller.

“It is no secret that the career education sector is under attack by short sellers, trial lawyers, self-styled consumer advocates, and some traditional academics. Although they should know better, these critics use anecdotes to generalize and to make sweeping condemnations of our sector,” Miller said. “They seize on admittedly flawed government data to make the most extreme statistical arguments. They exploit the same small cadre of so-called third party experts to generate critical comments. And they recycle old news to give currency to new allegations. In short, they twist the truth to serve their self-interest.”

But Eisman is not the only one leveling criticism at the for-profit education industry.

University of Phoenix Recruiter Goes to Homeless Shelter

Benson Rawlins was considered homeless last year when he met two recruiters from the University of Phoenix, who gave three seminars at Y-Haven, a shelter for transitional men in Cleveland, Ohio, or in effect, a homeless shelter.

Rawlins doesn’t have a GED, but said the recruiters had no qualms trying to sell him an expensive associate’s degree.

“It seems like it is just too much all about money,” he said, “Instead of helping someone get an education.”

The university told ABC News it does not tolerate recruitment at facilities like Y-Haven.

“We can assure you that anyone who participated in the recruitment of residents from homeless facilities in Cleveland no longer works for the University,” said Alex Clark, a spokesperson for the University of Phoenix. “Any such activity is strictly forbidden by our Code of Business Conduct and Ethics, and employees who violate this policy face disciplinary action up to and including termination.”

Harris Miller said even though the schools serve an important role by providing higher education to students who wouldn’t ordinarily get one, many schools’ recruiting practices need to be changed.

Miller claimed that universities began to change even before the GAO’s report on their misleading practices, including changing how recruiters are compensated (so they do not receive bonuses or prizes for recruiting students), offering “test drive” programs to help people figure out if higher education is for them and focusing more on consumer protection.

When asked why for-profit universities don’t return money back to those who have been misled by their solicitations, Miller said: “There are other countries in the world like Canada which have a different system and it’s something we’re going to look at.”

But Miller admitted that the industry has no plan in place to pay back those who are carrying a debt from for-profit schools.

Whatever the industry’s plans for future, Dalmier said it won’t help heal what happened.

“If they tell you something, investigate it before you enroll in their program. You really need to find out the truth and how to further your passion or your dream,” she said. “That way, you don’t end up like me.”

After ABC News’ interview with Pepicello, the University of Phoenix offered Dalmier a scholarship for a bachelor’s degree of her choosing. Dalmier said she is considering their proposal.

Pepicello also said he plans to change the school’s recruiting practices, especially the current model of compensation, and will be offering students a “test drive.”

Click HERE to read a letter to ABC News from William Pepicello.