Wednesday, March 26, 2014

A Business School Sells Out

By Professor Doom


For the most part, my blog focuses on the schools most everyone goes to: state and non-profit schools. Yeah, I’ve tossed a few bombs over at University of Phoenix and the like, but I just can’t help pointing out obvious issues there. I’m still reeling from the knowledge that UoP spends hundreds of thousands of dollars a day on internet advertising…, and over a million dollars a day for advertising in general. Because accreditation is such a joke that anybody can just grab an Education degree and be qualified to teach anything in higher education, for-profits have no trouble finding faculty willing to work for peanuts; past that point, it’s just a matter of finding suckers to sign up for the loans, then squeeze them dry and spit them out. As I wrote before, the profit margin for this “business” is huge, once you get the students signed up.

“…my wife decided to get an MA in Educational Psychology with a Gifted Education focus in my school’s College of Education.

The horror. The horror.

Some classes have a few legitimate assignments, but even these are designed to be gradable by a robotic “rubric,” lest any actual thoughtful evaluation or feedback occur. Most classes are driven by silly multiple choice quizzes, obviously written by a textbook company robot…Really. It would be embarrassing were it not so criminally lazy….

…Students do more reading, research and writing in one of my undergrad classes than these distance-learning grad students do in a semester (--by this, the faculty member means,” three or four graduate courses in Education”).

 I don’t understand how this program got approved or accredited…

--seriously, every faculty member that looks at what is going on in Education sees those programs are ridiculous. This guy never looked at accreditation to see that accreditation is a fraud, and that’s why he doesn’t understand how the program got accredited.


University of Phoenix claims to be mostly a business school, and they certainly give their students the business. I reckon they chose the name “Phoenix” so as to generate confusion with a legitimate business school, the Thunderbird School of Global Management. In the past, Thunderbird was the top tier school for students wanting to get an MBA.

Prestige is as big a deal in business as in academia, and Thunderbird commanded a high tuition. Thunderbird also gave real results, and its alumni occupy many key roles in today’s corporatocracy.

Alas, the administration at Thunderbird went into full plunder mode, and the school went from having a massive bank account to losing millions, year after year. Now, businesses are about making money, so when a business school isn’t making money, that reflects very poorly on the school. Thunderbird went from being a dominating top school, and went all the way down to #2. I guess losing money isn’t as bad a thing in business as it seems…but it’s still tough to lose the top spot.

Anyway, prestige is everything in business, everything to a business school that is competently run, so the president of the school had to have a response to this loss of prestige:

“With bold plans for global growth on the horizon, I am confident Thunderbird will reclaim its place at #1.” –Thunderbird President Penley responds on March 11, 2014 to news that Thunderbird dropped to #2 in the US News International Business Category after holding the top spot for 18 years.

--Ouch. He wants growth, not prestige. A typical administrator. Sucks to be a Thunderbird Alumni right now.


With finances in a complete shambles due to horrible mismanagement (over 20 million dollars in cumulative operating deficit since 2000), the school is looking to sell. The only buyers for a non-profit school, apparently, are for-profit schools.

Why would a for-profit school want to buy a losing, non-profit school? That’s easy. If the non-profit school has accreditation, the for-profit can buy them out, and then run that school into the ground, plundering the impotence of accreditation in exchange for the massive profits of the student loan scam.


“My passing grade is due to all those years I spent at Sylvan Learning Center.”

--Every student I had that went to Sylvan said it was worthwhile…granted, it’s been a long time since I’ve had a student mention Sylvan.


In this case, the buyer looking to plunder is Laureate. Don’t recognize that high-falutin’ name? That’s because Laureate used to be Sylvan Learning, before getting bought off into a private company. Laureate owns many online schools, with reputations varying from very shady, all the way up to shady. They’ve bought other non-profit schools, with results that  weren’t that good.


The business model is simple:  use the leveraged buy-out (LBO) model and crony relationships to acquire poorly governed private institutions, often against the wishes of donors and alumni.  Then, lower admissions and academic standards while dramatically increasing enrollment by tapping into millions of dollars of government-guaranteed and taxpayer-subsidized loans.

--this is the same model less scrupulous non-profits use, I might add. Naturally, the alumni sense a conflict of interest in the mismanagement, as the mismanagers stand to profit nicely in the sellout.


Laureate’s obvious plan here is to buy Thunderbird, then use what’s left of the prestige of the school to funnel its own students to Thunderbird, scrape every last dollar of student loan plunder from them, then laugh all the way to the bank.

It’s a standard issue plan, and I’ve seen the like before in non-profits as well, but there is something different here. See, Thunderbird was, at one point, a real school, which means its graduates have legitimate degrees, and they have some influence now. Those alumni are trying to spread the word, and have the skills among them to expose the shenanigans going on here; they’re unaware that what they’re exposing is actually standard practice in much of higher education nowadays. Their website, freethunderbird, is just loaded with the straight up facts of what’s really going on.

This debacle highlights another class of victims resulting from the corruption of higher education today. It isn’t just the students, who are being destroyed in droves by the student loan scam. It isn’t just the faculty, forced to work as marginal adjuncts to support an ever more uncontrolled administration. It isn’t just society, forced to support this corrupted system by wasting ever larger amounts of tax dollars.

The class of victims I’ve only touched on before is the alumni, those that went through higher education when it was legitimate, but now see their degrees turned to worthlessness as the schools that were once so prized get turned into yet another worthless scam school of no consequence.


“Previous generations of Thunderbird administrators and trustees occasionally navigated the school through rough economic and fiscal patches.  What they did is what any Thunderbird MIM or MBA [used to] learn to do:  you focus on your unique brand and value proposition; and keep the spending in line with revenues… 

Fellow alumni, it appears that character and management prowess has left the building at our little desert alma mater…” 

--“character” is another word for “integrity.” It’s something that’s distinctly missing in administration, as I’ve commented on once or twice before. Thunderbird is hardly the only school to be victimized like this.


I’ve often complained of the “Math Education” “History Education” “Art Education” and “Whatever Education” degrees that have diluted the usefulness of having a degree in a legitimate subject, but at least the degrees have different names (even if administration can’t tell the difference), and at least the school where you got the degree still counts for something. This is different, as now all the alumni of Thunderbird are paying the price for the greed and lack of integrity of administrators that came to plunder long after the students had graduated.

Should the alumni have some influence in stopping the degradation of the degrees? And how should they have it?

Think about it.




  1. The real question is, "What accreditation does the school have?" This post goes to underscore what a joke the ACBSP really is, because U Phoenix is ACBSP accredited. Only about 300 business schools world-wide are AACSB accredited (note the difference in acronyms). The ACBSP was officially recognized by the Dept of Ed during the Bush Sr. Admin. The same happens in many academic disciplines--new accrediting bodies are formed so bureaucrats can have fancy titles and big salaries to rubber-stamp joke schools like U Phoenix.

    Prospective business students need to recognize that there is only one valuable accrediting body, the AACSB. If you can't get into an AACSB-accredited program, don't waste your money, because many major companies will only hire from AACSB programs. Another valid accreditation, even though it is really a "membership by invitation" is the AAU (Assoc. of American Universities), which consists of 60 member universities which range from Harvard to Stanford to Stoney Brook to Oregon. I understand the arguments that the AAU is elitist and favors private research, thus discriminating against many high-quality Land, Sea, and/or Space Grant universities. Fair enough, but the point is that you won't get a crap education from an AAU university. You also won't get a crap business school education from the AACSB. I am sure that Thunderbird will eventually be dropped by the AACSB, but that process can take several years, so they will be able milk the name for awhile.

    Accreditation is a good thing, but prospective students (and faculty) need to know the quality of the accrediting body and not be deceived. You don't have to go to a Top 50 or Ivy League school to get a good business education. There are many great AACSB programs offered through institutions like the universities of New Mexico, Ohio State, Washington State, Kentucky, Maine, Utah, etc. In many cases, those programs will cost less than what U Phoenix or Thunderbird will try to screw you out of, too.

    One last note. There are many regional public universities which don't have the research credentials to ever get into the AAU or AACSB and I've know many really great faculty who've chosen to work at them, people with Stanford PhD's and such. These can be good programs for people in small business or who plan on staying in other undergrad disciplines but need some management skills. Always look at faculty credentials and specific program aspects when choosing these programs, because they can meet your needs. Not all of these schools are bad investments, depending on your individual needs.

  2. Thanks for adding much to the discussion. You really underscore an important point: accreditation is the key. Unfortunately, students aren't told how bogus most accreditation is. They just figure "hey, if the government approves loans, it must be good" and that's just not the case, opening up a wide opportunity for scamming.

  3. I find the accreditation board info VERY interesting.

    Concerning poor old, dear Thunderbird: the alumni have launched a surprisingly successful, rear-guard guerrilla action. The Laureate takeover is now at least postponed and perhaps even halted. As you mentioned in your write up, this alumni association is a group that understands how to organize to achieve results.

    Now it comes down to the question: what have T-Bird alumni really achieved by frustrating the efforts of Laureate. I see the results coming down in only a few ways:

    1) Laureate is rebuffed and this is T-Bird's near-death experience - the school reaches the banks of the River Styx but turns back in time, reformed and redeemed, to resume its niche place in the world of business schools. (I'm not all that confident in this result, but a guy can wish.)

    2) Laureate is rebuffed but we gain the time it takes to hold a proper, dignified Viking Funeral as we lovingly load the corpse of Thunderbird into the longboat, set it alight and commit it to depths of failed academia. The Singapore Alumni Association said this at the start; give Thunderbird the hemlock, kill it before it degrades and dissipates and preserve the memory of the school and the value of the degree to its holders.

    3) Laureate is rebuffed only temporarily and the worst of your predictions comes to pass.

    Personally, I'm OK with either 1) or 2) with 1) as my distinct preference. Both are more dignified outcomes that setting up Thunderbird to be the glamorous whore in the front window, there only to lure foot traffic into the back door of the brothel.

  4. I'm leaning towards 3 as the ultimate outcome. Bottom line, alumni just don't have the power to block things indefinitely. Thunderbird will still bleed out, it's value will drop, another bidder will come...and that new bidder will have every bit as much integrity as Laureate. All the alumni are really accomplishing is a delay. Maybe, just maybe, 2 will happen, but as long as Thunderbird has accreditation, it has an asset that is worth selling.

    Now, if you can nuke Thunderbird's accreditation, then 2) is quite possible. 1) can only happen if you can instill integrity in the administration; good luck with that, I've had no luck along those lines at other institutions...and even if you do, sooner or later you'll get another integrity-free batch, and you're back to square one.