The university's online program attracts students, profits, and praise

Phoenix Rises

By FLORENCE OLSEN

Phoenix

When it is 5 a.m. and dark outside, drivers speed westward here along

Even at this hour, students who are online can call for help from technical-support specialists who are part of the university's staff of 1,700 online admissions advisers, academic counselors, faculty recruiters, instructional specialists, software developers, and technicians.

Online students are taught by 7,000 faculty members, most of whom are part-time employees of Phoenix who have full-time jobs elsewhere.

Thanks to an increasing number of such students, Phoenix Online is one of the nation's largest online-university businesses in a growing field of private, for-profit competitors. For many years, the University of Phoenix's expansion into new classroom-based campuses around the country went largely unnoticed in traditional academe, which was focused on younger, full-time students. But the financial success of Phoenix's online operation has raised the visibility of the university and stirred new interest in its unique combination of business acumen and pedagogical focus.

James Gillespie, a 38-year-old trucking supervisor who works in Atlanta for Roadway Express, is the kind of student that Phoenix seeks to attract with its online programs. Earning an M.B.A. has been Mr. Gillespie's personal goal for a long time, but he says the degree also will prepare him for a job in his company's international division.

Mr. Gillespie, who is enrolled in the M.B.A. program in global management, works 12-hour shifts for seven days in a row, then he is off work for seven days. He is starting his second course in the Phoenix Online program, so he doesn't have a lot of online experience.

"I have to be honest, I wasn't too technologically savvy," he says, even though he had experience running specialized computer programs geared to the truck-loading business.

But after teaching himself how to use Microsoft programs, Mr. Gillespie says he is getting used to writing research papers on his computer. He is especially thankful that he took a philosophy course at Georgia State University years ago that required him to fill up a blue book several times a semester. The philosophy course forced him to write extensively, just as his online-degree program is forcing him to do now.

Reflecting an increasing acceptance of distance education on the Internet, enrollment at the online campus, now at 49,400 students, grew 70 percent this year and brought in $327.4-million, mostly in tuition revenue. Phoenix Online reported net income of $64.3-million for the year, and the price of its trading stock is up to around $32 a share.

"I don't think you're going to find very many real strong critics," says Janet K. Poley, president of the American Distance Education Consortium, which develops distance-education programs for public colleges.

Instead, some administrators involved in online education now use phrases like "incredibly smart as business people" and "very legitimate programs" to describe the University of Phoenix Online. "They don't take on too much, and they deliver on what they say they're going to do," says A. Frank Mayadas, director of the Alfred P. Sloan Foundation's grant program for online education.

Compared with community colleges or state universities, Phoenix Online is a pricey alternative, and some observers argue that Phoenix Online takes in millions of federal student-loan dollars that could go further in helping minority students were they spent at less-expensive, public institutions. The total tuition for an M.B.A. from Phoenix Online is about $25,000, for example, whereas Georgia State charges in-state students a total tuition of $10,500 for a full-time M.B.A. degree.

Even though the parent company is unpopular among some critics of for-profit education, the consensus is that it understands its market, and Phoenix Online is proof of that, says Diane Harley, director of the Higher Education in the Digital Age project at the University of California at Berkeley. Its niche is "the convenience market," where the customers want fast, easy access to degree programs.

The Phoenix Philosophy

Brian Mueller, the chief executive officer of the online campus, puts it differently. Phoenix Online is student-centered instead of "tenured-faculty centered," Mr. Mueller says. "We want to make sure we're teaching in areas that students have a need to learn and in a way that fits their schedule and their ability to learn."

Phoenix's online pedagogy is remarkably similar to traditional classroom practice, except that it occurs on a tightly compressed schedule. The first class of each course is held on a Thursday, with faculty members assigning textbook chapters and articles to read from the electronic library and suggesting Web links for additional research.

Faculty members then deliver a weekly lecture, distributing it electronically as a text-formatted Word document in lieu of a videotape, and they post discussion questions based on the readings and the lecture. Students spend the greater part of the week participating in faculty-led class discussions online and working with other students on small-group projects using e-mail and group-collaboration software.

At the end of the week, which always falls on a Wednesday, students turn in a paper or a project. The same schedule is repeated for five weeks for an undergraduate course and for six weeks for a graduate course. Students are permitted to take only one course at a time.

The University of Phoenix Online is growing faster than any of the university's 40 physical campuses, a success that it says has been achieved by using information technology conservatively. Until recently, it has eschewed most of the flashy, multimedia gadgets used in many online-education programs in favor of basic computer and network technology to which the largest number of working-adult students have access at work or at home -- a 56K modem, Microsoft's Internet Explorer or Netscape's Navigator browser, and Microsoft Outlook Express e-mail service.

Phoenix administrators say that online programs at other institutions often are "overengineered," with too many expensive bells and whistles and multimedia gimmicks.

"We're not worried about putting lots of streaming video into things," says Laura Palmer Noone, president of the University of Phoenix. "A lot of times, students have told us that's not effective anyway."

Unlike large research universities where investing in new, unproven technologies can be justified as a research project, Phoenix strives to play it safe rather than experiment with early releases of educational software, says Robert A. Carroll, vice president and chief information officer of the Apollo Group, which owns the University of Phoenix. In matters involving academic and administrative systems, he adds, "we're not an innovator." Investments are made in systems -- online financial-aid processing, for example -- that can make life simpler and more convenient for students.

Instead of buying information technology from companies that specialize in higher education, Phoenix Online has customized Exchange Server, Microsoft's general-purpose e-mail and collaboration software, creating an online-learning system and virtual classroom for collaborating "in a very efficient way," says Mr. Mueller, the online campus's chief executive officer.

Good Customers

The size of the University of Phoenix as a whole also makes its students ideal customers of the major academic publishers as those companies experiment with varieties of digital materials to replace paperbound textbooks. Phoenix students spend hundreds of thousands of dollars on textbooks each year from Pearson Education, Thomson Learning, McGraw-Hill Companies, and John Wiley & Sons. In some cases, the publishers provide made-to-order texts that mix content from different textbooks or that have been written according to outlines and specifications supplied by Phoenix.

The university has introduced electronic textbooks for students who would rather not order print texts for delivery to their home or office. Distributing tens of thousands of new textbooks to students every five or six weeks has been a challenge for the university's two textbook distributors, says Adam Honea, dean of the College of Information Services and Technology for all of the University of Phoenix. But many Phoenix Online students want to keep using textbooks, and the university has responded by asking publishers to make hard copies of the customized textbooks available as well.

In other respects, Phoenix students have entered the digital age. "Resource" is the university's new online-delivery system for all-digital course materials, both for online students and for students who attend classes "on ground," which is Phoenix-speak for the university's suburban campuses.

Included in Resource, for which undergraduates and graduate students pay, respectively, $40 and $48 per course, are an electronic library of journals and newspapers, a reference library, Web links, and simulations. Simulations are multimedia software programs that help students learn the more difficult and complex concepts that are part of the curriculum.

First introduced in the M.B.A. programs, simulations are being used to teach students how they might deal with difficult situations where they don't have all the information they need to made a decision, where the information they have is changing, or where they constantly face new circumstances that are beyond their control.

In one economics simulation, the student assumes the role of a Farmfresh grocery-chain manager who is responsible for the company's cost-and-revenue decisions. Midway through the simulation, the student is forced to modify his previous cost structures based on new information -- that prices for oranges have dropped and are expected to remain lower for the remainder of the year.

Simulations have the quality of a game in which you try "to make better and better decisions," Mr. Honea says. The university has paid a company based in India to develop 30 simulations for teaching complex concepts, and it has plans to build a sizable library of simulations that are custom-tailored for its curriculum.

Phoenix has offered online adult education since 1989. In building the online-degree programs, the university took its campus-based programs and copied them "almost identically," says Mr. Mueller, the chief executive officer.

Phoenix officials vigorously defend their online programs, which are based on a centrally designed curriculum developed by many experts rather than a single instructor. And courses emphasize techniques that compensate for the lack of face-to-face exchanges between faculty members and students and among students themselves.

Each year, courses in the Phoenix programs are reviewed, fine-tuned, or entirely rewritten, based on extensive data from faculty and student surveys, Mr. Mueller says. And because of the constant changes in information technology, courses in those technology programs are reviewed twice a year.

Some academic critics complain that Phoenix Online has stripped faculty members of their central role in higher education and replaced them with instructional-design consultants. Phoenix counters that professors at traditional universities who attempt online education are learning as they go, and often give students a bad experience as a result.

Phoenix Online is not known for its high-profile faculty members, although it employs a number of company executives as instructors: Jessica Keyes, president of a software-development company in Jersey City, N.J., for example, and Jon E. Currie, founder of a national media-research company, based in Agoura Hills, Calif.

As is common among online universities, such as the University of Maryland University College, Phoenix Online puts its faculty members through a lengthy online-training program. The university requires each new faculty member to take a four-week, online course that teaches how to become an effective online instructor. Instructors must spend an additional two weeks with an experienced online faculty member who helps them create an online syllabus. And for their first course, new instructors are assigned an experienced senior instructor as a team teacher.

Phoenix also has an answer for its critics who say that online education eliminates the essential face-to-face nature of learning. Administrators of the online campus insist that by using information technology as they do, working adults can gain the benefits of a degree program without face-to-face interaction.

"If we're going to be effective teaching students online," Mr. Mueller says, "we need to make it more social" than a traditional classroom. Phoenix tries to achieve this by requiring students to do most of their online work as members of small groups, or teams.

It is an effective technique, says Larry E. Penley, dean of the College of Business at Arizona State University, and is one that Arizona State also uses in its online programs. Working in small groups is important for learning, he says. It also helps keep online students from dropping out, "because your colleagues support you, work with you, and have expectations for you."

Denise Tanguay, a professor of management and industrial relations in the College of Business at Eastern Michigan University, is more critical of the online-degree programs that Phoenix offers.

"They are responding to a market demand for a certain type of credential -- in this case, an academic degree," she says. "But it's an academic degree for students who have very little time to commit to getting an academic degree." She questions whether such institutions can demand from students the effort that is needed to get a good education when, as businesses, they need to satisfy students as customers.

Ms. Tanguay, who is a member of the American Association of University Professors' national committee on accreditation of universities and colleges, even questions whether Phoenix and other national, for-profit institutions should be eligible to seek accreditation from the Higher Learning Commission of the North Central Association, which has accredited the University of Phoenix and its online programs. "If we're going to continue to have people believe in accreditation, then accreditors have to come clean that these are different institutions," she says.

Phoenix officials have heard such criticism before and are unfazed by it. "I think we've been innovative, and things we have done we have seen traditional colleges emulate over time," says Bob Barker Jr., executive vice president of the University of Phoenix.

The International Market

The prospect of snagging many more adult students overseas has led Phoenix officials to begin planning for the expansion of Phoenix Online in the international market. The online campus, which is adding international students to its rolls at a rate of 200 each month, has been hiring enrollment advisers in regions with large populations of English-speaking people.

However, the future growth of the online campus could be slowed if corporations such as Motorola or Toyota decided to expand their offerings and to seek accreditation for their own corporate training, and began sending fewer students to Phoenix Online.

Nina Omelchenko, the senior vice president for university services, says that some corporations are beginning to talk about such accreditation. But the possibility, she says, poses no immediate threat to Phoenix because such talk is only in the early stages.

Some observers say that Phoenix is in a good position to take advantage of its lead in online education to keep expanding, if it stays focused on a limited number of degree programs in fields for which there is strong demand in the marketplace. Health care is such a field and is the area in which Gary Merica is pursuing an advanced degree through Phoenix Online.

Mr. Merica, a 49-year-old M.B.A. student in the health-care-management program, says he enrolled in Phoenix Online thinking that "this education is just going to help me to be better at what I do." Mr. Merica is a pharmacist at York Hospital, in York, Pa., where he is the quality manager for inpatient pharmacy services.

He figures that -- between child-care responsibilities for two young sons -- he puts in two to three hours a day, every day, on a course in human relations and organizational behavior that will run for six weeks. "I'm just learning an awful lot," he says, "and actually wish I would have done this a while ago."

ALSO SEE: By the Numbers: the University of Phoenix Online Colloquy Live: Join a live, online discussion with Brian Mueller, chief executive officer of the University of Phoenix Online, on Thursday, October 31, at 1 p.m., U.S. Eastern time.

BY THE NUMBERS: THE UNIVERSITY OF PHOENIX ONLINE

Students


Average age: 34

Network access: 40 percent of students have broadband connections to the Internet; students gain access to online courses from 300 different Internet-service providers.

Graduation rate: 65 percent of students who start a degree program eventually earn a degree.

Academics


Degree programs: 25 programs are offered in 16 fields: accounting, administration, business administration, e-business, computer-information systems, education, e-education, general studies, health-care management, human-resource management, global management, information technology, management, marketing, nursing, and technology management.

Most popular degree programs: B.S. in management, B.S. in information technology, and a general M.B.A.

Flow of students into courses: 8,000 students begin a new course each week.

Class size: Capped at 13 students. Typical class size: 11.

Faculty members: 7,000, of whom 95 percent are part time. Faculty members must be working in the fields they teach and must have at least a master's degree.

Finances


Tuition: Typically about $30,750 for an undergraduate degree.* (The typical student comes with about 45 transfer credits.)

Loans and employer reimbursement: 48 percent of online students receive some federal grants or loans to help cover tuition; 60 percent receive some employer reimbursement.

* Undergraduate credit hour: $410; master's credit hour: $505; doctorate credit hour: $550. Online tuition rate, on average, is 20 percent higher than rate for courses taught in classrooms.

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