AZ Republicans demand tax break for Apollo Group, which increases fed deficit

by David Safier

The only vaguely coherent reason AZ Republicans could give for not extending unemployment benefits was that it would increase the federal deficit. But they were willing to bite the bullet and vote for the extension if they got corporate tax cuts. One of the companies targeted for the cuts: the Apollo Group, which runs University of Phoenix, a for-profit college that gets most of its revenue -- up to 90% -- from federal student grants and loans. In 2009 alone, it took in a billion in Pell grants.

For-profit colleges like University of Phoenix have track records of scamming students into enrolling in programs they won't be able to complete, often in fields where they wouldn't recoup their expenses even if they did complete the program, often offering subpar education that doesn't even prepare students for the jobs. Ironically, I'm sure many out-of-work Arizonans are struggling to pay back loans to University of Phoenix, but the college isn't concerned if they can make the payments, since these are federal, government-backed loans. U of Phoenix got its money when the students walked through the door.

I became aware of this specific tax break courtesy of a guest opinion by Jan Brewer in the latest Capitol Times (subscription only).

Here are the two money quotes:

As has been widely reported, Pearce requested additional safeguards against fraud [before he would vote for the unemployment extension], and Tobin wanted to couple the continuation of the EB program with business tax cuts, including the possible revival of vetoed bills in some form based on the Invest Arizona property tax cut for new or expanding businesses (SB1041) or the corporate income tax cut for multi-state service providers such as Apollo Group (SB1552). [boldface added]

[Brewer writes later she is willing to consider the tax cuts next session]

As promised, negotiations are on-going with the Apollo Group, and I have committed to improving our business property tax system.

Apollo Group is the largest for-profit college corporation in the country, living off government funds, increasing the deficit -- something the Republicans scream about continually -- by taking advantage of and sometimes even defrauding potential students to bring in the Fed grants and guaranteed loans. And yet Republicans want to give this company a tax break while they don't think our struggling unemployed deserve $230 a week to help them scrape by until the economy begins producing more jobs.

For anyone who wants to look into this, here are some links to follow:

• Student-recruitment tactics at University of Phoenix blasted by fed (AZ Republic, 2004) U of Phoenix paid a $9.8 million fine, but didn't admit to any wrongdoing.
• Fraud by University Owner Is Found (NY Times, 2008) Because Apollo group "fraudulently misled investors in 2004 about student recruitment policies," it had to pay shareholders $280 million.
• Student Aid at For-Profit School Will Be Reviewed (NY Times, 2010) A review of Apollo group "will look at how Phoenix, which took in $1 billion in Pell grants last year, has handled federal student aid it has received since the 2009-2010 academic year."
• Oregon AG sues Apollo Group to recover $10M (AZ Capitol Times, 2010) Oregon claims it lost $10 million from misleading financial statements made by Apollo Group.
• For-profit schools reel as rules affect enrollment (AZ Capitol Times, 2010) "Defaults on student loans have been rising, sticking taxpayers with the bills. So the government has proposed regulations that could limit schools’ access to federal financial aid if graduates’ debt levels are too high or too few students repay loans."
• Students, lawmakers question value of for-profit colleges (Kansas City Star, 2011)
• For-profit colleges deepening student debt crisis (Star-Telegram, 2011) 
• Shares of for-profit colleges soar after U.S. eases rules on federal aid (LA Times, 2011) The proposed regulations were defanged after a $6.6 million lobbying campaign by for-profit colleges in 2010-11. "This is good for certain schools, and it's a home run for certain schools," he said. "Apollo is a clear winner."

Comments

[Azazello]

Those who favor privatization of K-12, through charters and vouchers, should look how the for-profit "college" industry works. Here's a little primer → http://huff.to/hGMQa5. All tax cuts are irresponsible.

[Rrauzon]

Mr. Safier,

This post misleads Arizona taxpayers and offends the hardworking students and staff at University of Phoenix.

Your assertion that Apollo Group was “targeted” for tax cuts in return for an extension of federal unemployment benefits is flat out wrong. Like many companies based in Arizona that do business in other states, University of Phoenix is subject to a blanket policy (not a targeted one) of double-taxation — once by the state of Arizona, and then again by the state in which our revenue is generated. Arizona desperately needs a fair tax policy to promote job growth.

University of Phoenix employs 15,000 Arizonans, providing jobs to hard-working people who help educate America’s underserved populations. Our students are the returning military veterans, first-generation learners, and working parents who are often left out of the traditioanl higher education system. Your readers deserve to know of the benefit we bring to these underserved populations. It’s unfortunate that you failed to examine the success rates and fiscal costs of other forms of education such as community colleges. If you had, you’d find the facts differ with your blog’s analysis.

We are proud to be one of Arizona’s largest employers, and proud to call Arizona home. Your off-base and misleading comments will not dampen our commitment to our students. In the future, before you launch into another false attack, we suggest that you do your homework. Your readers deserve that much.

Sincerely,
Ryan Rauzon
ryanrauzon@email.phoenix.edu

[Tucson Vice]

Ryan,

Nobody who reads this blog needs you to tell them what they deserve with regard to its content, least of all with regard to the level of research involved in its reporting. Your effort to divert the conversation has failed. For future reference, this tactic rarely works when you are dealing with the loyal base of a particular person, group or organization. It detracts from your argument and makes you and your company seem cheap.

"Our students are the returning military veterans, first-generation learners, and working parents who are often left out of the traditioanl higher education system."

All groups which will pay you through government backed, guaranteed funds (the G.I. Bill, for instance). Nobody doubts that you provide education services (such as they are) to these people. The question is whether or not you leave them better off. If you were to tell me that there was not an explicitly stated company policy set in place to target veterans for the G.I. Bill benefits they receive, I would be inclined to think that you were lying.

If your industry were known for being forthright and honest in its dealings with students and the government, I seriously doubt that the news organizations above would have dedicated so much time to the investigation of your work. These accusations don't emerge out of thin air.

Also, I find it funny when a spokesman from Apollo Group tells a well educated man to do his homework.