Rising Phoenix ruffles feathers

November 14, 1997

IN A rented classroom on the second floor of an office building in Pasadena, California, 36-year-old Ruzanna Berberyan is preparing a presentation in business law.

An Armenian immigrant with "two big boys and a little girl", she has arrived early for her Thursday night class at the University of Phoenix. A payroll tax accountant with 13 years' experience in a major US food corporation, Mrs Berberyan spells out in frank terms her motives for pursuing a degree in business administration.

"I want to advance my position within the company and I think it will open up more opportunities for me," she said. "You walk in with confidence and you tell them you have this degree. If you don't have it, you may be a little bit intimidated."

The University of Phoenix was recently described by the New York Times as the "biggest challenge to higher education in the United States today". That may sound overly dramatic. But by catering specifically to mature students such as Mrs Berberyan, the for-profit and thoroughly unconventional university has apparently plumbed a huge demand for adult education in the US. In the process it has made its founder, a Cambridge PhD graduate and former university teacher, a very rich man.

George Sperling boasts of starting in 1976 with just eight students. Twenty years later, the university counts some 40,000 students in "learning centres" from California to Michigan, making it the largest private university in the US, and by all accounts its student numbers are growing exponentially.

Even more striking has been the rise of its stock. The Apollo Group, which owns Phoenix, became a public company in December 1996. In a year its share price soared from $2 to more than $40, and Mr Sperling owns five million of them.

It has given him "personal wealth beyond the dreams of avarice", he said. Suddenly worth hundreds of millions of dollars at the age of 76, he is using the money to fund pet causes, such as the legalisation of medical marijuana.

The university, based in the Arizona capital, has accreditation from one of the major US regional accrediting bodies, but it is about as far removed from a conventional university as it is possible to be.

Instead of campuses, it operates from rented office space. Its teachers are working professionals with masters degrees or higher, who work part-time for about $50 an hour. Students must be employed, and it is not cheap, charging about $6,500 a year for tuition.

It has aimed itself squarely at the needs of mature students out to boost their salaries and promotion, not join sports teams or fraternities. It specialises in distance learning. When students join classes, they typically know which night of the week, and where, they will be studying for the next two years or more. It is a market that traditional US universities do not seem to be satisfying.

"They didn't even know it existed," said Dr Sperling from his Phoenix headquarters. "It's the magic of the market, it's the magic of capitalism. I don't see any limits right now."

An activist by nature, he says he left his job at San Jose State University to become an educational entrepreneur because "when I see confusion, I want to organise - sort of like an English sheepdog".

The reaction of the academic establishment, he said, has been implacable hostility, tinged first with contempt, then fear, and finally awe. "They finally had to accept the reality and figure out how to do it themselves."

Critics have dismissed the university as a diploma mill, and early on it faced what Dr Sperling called "blood battles" in state legislatures to shut it down.

Some universities banned their professors from moonlighting for Phoenix. It operates closely with companies, who supply both students (subsidising their fees) and staff. In an era when success in the US employment market is linked ever more closely to college qualifications, Phoenix is flourishing.

Dr Sperling says the reluctance among academics to think of higher education as an industry and their institution as a firm is his "greatest competitive advantage".

Upon talking to students at the university's learning centre in Pasadena - in half a dozen rented classrooms - it seems Mrs Berberyan is very much the typical student. Most are professionals in their thirties or older, pursuing degrees for specific career goals, with their employers helping to pay fees.

Several cited the convenience factor as part of their reason for choosing the university. Others like the fact that staff were themselves professionals. "They are not just academics," said Teri Loera, 42, the operating manager of a paediatric intensive care unit whose company had finally pushed her to take the nursing degree she required for her job. "They really know what the world is. But they give way too much homework."

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