Apollo Education Group: A Legacy of Lifelong Learning and Evolving Business Models
Apollo Education Group, a prominent entity in the higher education landscape, has a rich history rooted in the evolving needs of adult learners. Founded in 1973, its genesis was a direct response to a discernible shift in educational demographics. Traditionally, higher education was largely the domain of younger individuals. However, a gradual demand for accessible programs by working learners signaled a changing tide. The foresight of its founder, John Sperling, proved prescient; he recognized that the era of lifelong employment with a single employer was waning, to be replaced by a paradigm of lifelong learning and diverse career paths. This understanding laid the foundation for an institution dedicated exclusively to the educational aspirations of working adults.
The Genesis and Early Evolution of Apollo Education Group
The organization itself did not donate, rather the money came from the organization's PACs, their individual members or employees or owners, and those individuals' immediate family members. Organizations themselves cannot contribute to candidates and party committees. These charts include contributions to members' presidential committees. The initial establishment of Apollo Education Group was driven by a fundamental belief in the necessity of flexible, accessible education for those balancing work and personal commitments with academic pursuits. This philosophy permeated its early development, shaping its strategies and the services it offered.
The company's primary industry is Education/Training. Based in Arizona, US, and founded in 1973 by Dr. John Sperling, it was initially established as a response to a gradual demand for higher education programs by working learners. The organization was founded in 1973 by John Sperling and John D. Miller (chairman). Gregory W. Cappelli currently serves as its CEO.
The Flagship Institution: University of Phoenix
At the heart of Apollo Education Group's offerings has always been the University of Phoenix, its flagship institution. The University of Phoenix was founded in 1976 and offers online learning, including bachelor’s and master’s degrees in various subjects such as business, healthcare, and education. It also provides on-campus programs such as bachelor's degree, master's, competency-based programs, doctoral, associate, and certification programs for unemployed and employed learners. The university's commitment to serving both unemployed and employed learners underscores its dedication to providing educational pathways for a broad spectrum of individuals seeking to advance their careers or pivot to new ones.
The University of Phoenix provides growth opportunities for working adults. Its admissions profiles have been designed to accommodate diverse learning experiences and prior knowledge, with recognition of prior learning being a key component. The university offers online learning including bachelor’s and master’s degrees in various subjects including business, healthcare, and education.
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Expansion and Diversification: Beyond the University of Phoenix
While the University of Phoenix remains its most recognizable brand, Apollo Education Group's reach extended to other educational ventures and international markets. Apollo Group formed Apollo Global to manage and form subsidiaries, assets, and holdings overseas. Apollo Global was a joint venture between the Apollo Group and the Carlyle Group, with Apollo Group investing roughly $801 million and owning 80.1% of the new company, and Carlyle investing $199 million and controlling the remaining shares. Apollo Global later changed its name to Vanta Education.
The group’s portfolio included other educational entities. BPP Holdings is a holding company of the United Kingdom-based provider of professional and academic education. The company is divided into BPP Learning Media, BPP Professional Education and BPP University. BPP University is a United Kingdom degree-awarding body with four schools: BPP Business School, BPP Law School, BPP School of Health and BPP School of Foundation and English Language Studies. Insight Schools was an online high school offering classes from 9th to 12th grade. Carnegie Learning is a publisher of math curricula for middle school, high school, and post-secondary students, utilizing a blended approach with textbooks and software (called Cognitive Tutor) for each subject. All of the Cognitive Tutor curricula are based on extensive scientific research from Carnegie Mellon University, along with field tests in schools throughout the United States. The Cognitive Tutors are based on the ACT-R theory of learning, memory and performance. Western International University (West) was a university offering online and in-person classroom programs for adult learners. Founded in 1978, West offered associate, bachelor's and master's degree programs. West's mission was to provide a broad educational foundation, with a focus on business and technology, designed to prepare students for leadership positions in a dynamic, global marketplace. West was formerly located in Phoenix, Arizona and was more recently located in Tempe, Arizona. West offered in-person classroom teachings and online education. The university started shutting down in March 2017 and developed a two-year "teaching out" plan to allow students an opportunity to graduate from West or transfer to another institution. The school ceased all operations and officially closed in February 2019.
Furthermore, Apollo Education Group primarily provided higher education programs through its education brands such as FAEL and Open Colleges. FAEL is located in Brazil and offers university and postgraduate studies online and through its campus and 113 accredited undergraduate learning centers. Apollo Group also acquired BPP of London for $607 million in July 2009. In 2011, Apollo Group acquired Aptimus Ad Firm for $48 million. In 2011, the company sold its online high-school business to Kaplan. In 2016, Kaplan Professional Education was set to acquire College for Financial Planning from Apollo Education Group.
Financial Performance and Strategic Shifts
Apollo Education Group's financial journey has been marked by periods of growth and contraction, reflecting the dynamic nature of the for-profit education sector. The Apollo Group announced quarterly results on June 30, 2011, reporting $1.45 in earnings per share for the previous quarter, exceeding the Thomson Reuters estimate of $1.33 by $0.12. In March 2011, the Apollo Group sold its corporate headquarters in Arizona and leased it back in order to raise $170 million in cash. The deal with Cole Real Estate Investments included a 20-year lease requiring Apollo to remain in the complex.
However, the company faced revenue declines. Revenue of the company continued to fall: in the fiscal year ending on August 31, 2011, the net revenue was $4.7 billion; in 2012, $4.2 billion; in 2013, $3.6 billion. The operating income during this period fell from $956 million in 2011, to $676 million in 2012, to $427 million in 2013.
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These financial realities contributed to significant structural changes. In 2015, co-founder John D. Miller passed away. On May 6, 2016, the shareholders of the company approved the sale of the firm for $1.14 billion to a group of private investors: Najafi Companies, a Phoenix firm, the New York-based Apollo Global Management and, the Vistria Group of Chicago. The offer amounted to $10 per share, compared to its high of $89/share in 2009. The organization was eventually taken private by a consortium of investors including The Vistria Group, LLC, Apollo Global Management, LLC, and Najafi Companies for USD 9.50 per share in cash for both Class A and B shares in February 2017. Funds affiliated with Apollo Global and Vistria purchased Apollo Education Group for $1.1 billion in 2017.
More recently, as of April 2021, the group is being led by its CEO, Gregory W. Cappelli. In 2022, Apollo dropped plans to buy Pearson after a £7 billion bid was rejected.
Regulatory Scrutiny and Controversies
The history of Apollo Education Group and its flagship, the University of Phoenix, has not been without its share of regulatory scrutiny and controversy. In 2019, the Federal Trade Commission (FTC) reached a settlement with the University of Phoenix over aggressive marketing practices relating to a campaign several years prior to its take-private by Apollo and Vistria. Prior to a change in ownership, the company had been criticized for offering lower-quality degree programs.
Concerns about marketing practices and student outcomes have been a recurring theme. In 2004, a scathing report issued by the US Department of Education concluded that Phoenix, as The Chronicle of Higher Education put it, had a "high-pressure sales culture" that intimidated recruiters who failed to meet targets and encouraged the enrollment of unqualified students-in short that it rewarded "the recruiters who put the most 'asses in classes'". Apollo illegally withheld the report, but it was leaked, and the group's value on the stock market crashed. In January 2008, a stock-price suit was decided. Apollo was found liable for misleading investors by failing to disclose the Department of Education report that criticized the University of Phoenix's recruiting practices. In November 2008, Apollo paid $1.89 million to settle a religious discrimination class action without admitting wrongdoing. The Equal Employment Opportunity Commission had brought the claim on behalf of non-Mormon employees of University of Phoenix Online.
The University of Phoenix has also been subject to discussions regarding student debt. It has appeared on lists of colleges where students owe the most and is among the colleges that leave the most students crippled by debt.
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A notable recent development involved potential acquisition discussions. According to a report by Bloomberg, the majority owner of the university paid a $12.2 million fee to the University of Idaho in June after terminating a 2023 agreement to sell most of its assets. The University of Idaho had been in talks since 2023 to buy the University of Phoenix, and the purchase agreement was extended in June to give more time for discussions with legislators and stakeholders. However, the two institutions eventually decided to scrap that plan, which had been criticized by lawmakers and others in Idaho. Idaho President Scott Green stated that the deal had become “cost prohibitive and potentially distracting to other work.” He added, “We respect the University of Phoenix and wish them all the best. We appreciate their commitment to these conversations, and we learned many things we may be able to incorporate into our work.”
Current Status and Future Outlook
Despite the challenges and transformations, Apollo Education Group continues to operate, with the University of Phoenix as its central institution. For the fiscal year ended August 31, 2024, the University of Phoenix reported a net income of $113.1 million on revenue of $950 million, an increase from the previous year's net income of $64.9 million on revenue of $835.2 million. This suggests a degree of financial recovery and operational stability.
The organization's journey from its founding principles of serving working learners to its current status as a privately held entity reflects the dynamic and often complex nature of the for-profit education sector. Its history is a case study in adaptation, facing market shifts, regulatory pressures, and evolving business models, all while striving to fulfill its core mission of providing educational opportunities.
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