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University of Phoenix to Shut Down its 115 Campuses

University of Phoenix to Shut Down

University of Phoenix, owned by Apollo Group Inc., announced on 16 October, 2012 that it is closing down its 115 of the for-profit campuses nationwide. A university spokesman, Alex Clark said that the reason is simple since most students are choosing to study online. The shares of the Apollo Company dropped down by more than 20 percent after it posted a sharp decline in the quarterly profit due to higher costs and declining enrollment.

The campuses which are closing including 90 smaller satellite learning centers and 25 major campuses will have an impact on around 13,000 students which is about 4 percent of the 328,000 student's body. It is yet to be decided when the campuses will be closing down but the university is in process of notifying the students. There will be no new enrollment of students in the campuses which are shutting but the students that are currently doing degree courses will be able to continue their education. If there isn't any center available nearby, the company will continue the courses in the areas close to campuses.

The university was expecting that tuition fee freezing would help to retain the students and encourage others who have been paying higher fees in other institutions. University of Phoenix President Bill Pepicello said that people are simply holding off investing money in education at a time when the costs are rising and the outcomes are uncertain. In the quarter of June to August the students' enrollment for degree program dropped by approximately 13.8 percent to 328,400 annually and those of new students getting admitted to degree program fell by around 13.7 percent. But the action of shutting down the campuses will save around $300 million to the company as well as university.

In late September 2012, similar to the university, a division of Washington Post Company, Kaplan Higher Education also announced that it would be closing down its 9 campuses and shifting four others in nearby location. There was no reason given by the company but in August 2012 filing with the Securities and Exchange Commission it disclosed that an accrediting commission had given a warning to the campuses in Indianapolis, Baltimore and Dayton that they may lose their accreditation, if they fail to fulfill the requirements of student achievement.

When the negative publicity of the for-profits rose, the Kaplan Higher Education as well as University of Phoenix introduced new programs which were offered free to ensure that only those students who are capable of getting success are enrolled. These programs lead to substantial cuts in students' enrollment. A senior vice president for communications at Apollo Inc., Mark Brenner said that the university had announced publicly that around 20 percent of the students participating in the free three-week online orientation program either don't enroll or leave the program incomplete.

The shutting down of the campuses will have a great impact on the students who were interested in getting admitted to those campuses. But the university's decision of allowing the existing students to complete their degree program will prove beneficial to them for their further career.