Innovative Education for Working Adults

By Pablo Galarza

It's not easy being ahead of your time, especially in a field like education. Ask John Sperling, chairman, president and chief executive of Apollo Group, Inc., the parent company of University of Phoenix and Institute for Professional Development, or IPD.

In 1973, Sperling, at the time a professor at San Jose State University, set up the structure and curriculum that would become IPD. His goal was to offer higher education to working adults by incorporating their work experience as credit toward their degrees. "Adults have a hunger for learning," said Sperling, 74. At the time Sperling launched into Apollo Group, adults over the age of 24 comprised only 27% of the total student enrollment. Today, working adults over the age of 24 make up 45%, or about 6.6 million, of the 14.6 million total student force in higher education.

Apollo Group offers educational programs and services to more than 60 campuses and learning centers in 22 states and Puerto Rico. Enrollment in its two subsidiaries totals about 32,000. Over the last 25 years, working adults have come to recognize the value of a degree when it comes to career advancement. Nonetheless, Sperling realized that inconvenience was the primary deterrent to adults pursuing higher education. Though his curriculum program was rejected by San Jose State, Sperling presented his plan to the University of San Francisco, a private university, which allowed him to design a curriculum program for firefighters, policemen and other working adults.

Along the way, Sperling realized he had entered a market which had received little attention. Sperling surmised that adults were most concerned with the use of their time, and his objective was to help them obtain a degree in the limited time available to them.

He designed a program that eliminated the need for prerequisite courses college students usually must take in order to receive their degree -- curriculum that essentially would not enhance the career of working adults. Sperling also decided to concentrate class instruction to once a week, and he filled each class curriculum with plenty of interaction between student and instructor. "Academics are most conservative when it comes to themselves. They are only verbally radical," said Sperling. And he should know. Sperling, who has a doctorate in economics from Cambridge University, was a career academic until founding Apollo Group in 1973. Before that, Sperling was a tenured professor at San Jose State, and was a member of the faculty at University of Maryland, Ohio State University and Northern Illinois University.

In 1976, after tiring of the faculty politics he had to endure, Sperling decided to start his own degree program in Arizona, called the University of Phoenix. It was an uphill battle to gain certification, an essential qualification granted to institutions of higher learning. His curriculum at the time was considered radical because it granted credit for "life and work experience." "We eliminated the unnecessary, even though many colleges deem them to be necessary," said Sperling. Much of Sperling's curriculum program has been assimilated by universities, business schools and executive-MBA programs.

The University of Phoenix received accreditation in 1978. His first graduating class had eight students, but since then University of Phoenix has grown to be the twelfth largest private university in the U.S., with 19,700 adult students. The school has also replicated its teaching model at 33 campuses and learning centers in eight western states and Puerto Rico. The University of Phoenix has also developed training programs for companies like Intel Corp. and US West Inc.

From the beginning, Sperling ran the university as a for-profit entity. He hired faculty with a minimum of five years of recent professional experience related to the subject they were to teach. Professors are hired on a per-course basis and none of them are tenured. Since the school operates year round, it helps keep tuition costs lower. Apollo's campus and other facilities are leased, with additional classrooms rented on a short-term basis.

Today, Apollo's Institute for Professional Development provides program development and management services under five-to-ten-year contracts, to 14 regionally accredited private colleges and universities and at 27 campuses and centers in 15 states. Sperling says that IPD made money almost from inception and that its cash flow funded the growth of University of Phoenix. IPD also funded Sperling's next offshoot, a computer-based educational program called Online. Built from the remnants of Electronic University -- the then Secretary of Education's vision for the university of the future -- Sperling set out to tailor his curriculum so it could be transmitted using teleconferencing technology.

Online can be accessed, both nationally and internationally, through modem-based computers, using on-line services available through CompuServe or the Internet. This allows the busy working people Sperling targets to complete their course requirements in any location. About 1,200 people are enrolled in Online. Apollo's international expansion plans are going to come through Online, says Sperling.

Sperling expects earnings to grow about 20% to 25% for the next few years, leveraging its fixed expenses through increased enrollment. Sperling, along with his son Peter, vice president of administration, own 60% of the class A non-voting shares and 82.5% of the class B common shares after Apollo's December public offering. The company will use $32.7 million in proceeds from the offering to fund growth. Apollo has recently agreed to purchase Western International University, a Phoenix-based institution that offers programs for adults.

For the Nov. 30 first quarter, Apollo reported net income of $2.5 million, or 33 cents a share, up 76% from $1.4 million, or 19 cents a share for the same period the year before. Revenue grew 31% to $36.5 million, from $27.8 million for the previous year's first quarter.

Shares of Apollo, listed on the Nasdaq under the symbol APOL, yesterday traded for about 18 5/8.

This article can be found in the January 18, 1994 edition of Investor's Business Daily.

Reprinted, by permission, from Newsmakers, (C) 1995 Investor's Business Daily.