For-profit colleges tend to invoke images of predatory marketing practices, high tuition costs and low graduation rates. But American Public University is trying to buck the stereotype.
The school, which has deep and longstanding roots in the military, has high retention rates, nontraditional marketing practices, and tuition costs that have remained unchanged for more than a decade. At a time when the University of Phoenix, Everest College and other publicly traded for-profit schools have come under heightened scrutiny for targeting and allegedly exploiting military members for their tuition benefits, American Public is relying on its 65,000 active-duty service members and veterans to make sure it stands apart.
Founded by a retired US Marine Corps Major in 1991 as American Military University, the school once exclusively catered to active-duty soldiers who, stationed overseas or constantly moving between bases, wanted something the market didn't yet offer: a chance to attend a single, stable institution rather than transferring constantly from school to school, to take military specific courses. American Military University's students were also looking for what CEO Wally Boston calls "a military culture," where classmates and professors understood their unique challenges and shared similar ideals and experiences.
The school changed its name to American Public in 2002 in a bid to attract non-military members. Though 40% of its 110,000 currently enrolled students are civilians, the school still retains an American Military University branch and clings fiercely to its military culture, which Boston says sets it apart from other for-profits.
Deep military roots, for example, have compelled American Public to keep its tuition low. Boston said that since a huge portion of the school's students rely on limited military tuition assistance programs and GI benefits it serves a far more price-sensitive market than colleges that cater largely to civilians. Unlike federal loans, which can easily be taken out in higher amounts to accommodate price increases, military tuition programs are sharply limited and have been subject to cuts and freezes. Further, many service members are reluctant to shoulder additional out-of-pocket costs because of their limited income.
American Public last raised its tuition in 2001. It still charges $250 per credit hour, or just over $15,000 for an associate's degree, and the price for bachelor's degrees sits just at or below the cost of in-state tuition at many state universities — though it is significantly more expensive than a community college. By contrast, the University of Phoenix and its compatriots have long been accused of pumping up tuition costs; Everest College, which is owned by Corinthian, charges close to $40,000 for an associate degree, a fee that can snake even higher with additional costs like textbooks.
Many of American Public's counterparts have also come under fire for their recruiting practices, which involve expensive ad campaigns and high-pressure sales tactics like calling prospective students multiple times a day. A report by Iowa Senator Tom Harkin's in 2012 report said recruiters at schools like Everest College used "emotional exploitation" and misleading promises about job placement and program costs to enroll students.
American Public, by contrast, relies heavily on referrals from current and former students as opposed to costly advertisements or lead-generation services. Fifty percent of military-affiliated students, come to American Public after hearing about the school from another service member, said Boston.
"Soldiers trust other soldiers," said Jim Sweizer, a vice president at American Public. "What better source is there? It's an unbiased voice."
Matt Peeling, a student at American Military University, said he chose the school because he trusted the word of several fellow veterans who spoke highly of a culture that emphasized military values. Now the president of the school's chapter of the Student Veterans Association, he says he counsels soldiers and younger veterans that AMU offers an environment where they'll feel comfortable and understood. They can use military language and expect to be called by their proper rank, for instance.
"I tell them professors understand that they're not coming straight out of high school — we're more mature, with different goals," Peeling said.
Relative to other schools, American Public's referral number is also high for civilians, at 38%. Part of that is owed to the types of civilians who choose the school — the student body is heavily skewed towards public service industries like police officers and firefighters, who pass the school's name around their own communities, said Boston.
"They appreciate the military culture," Boston said, even if they themselves may never have enlisted.
Boston cites the school's relatively high retention rate as evidence that students are mostly satisfied with its performance. The 2012 Senate report found that American Public University had some of the for-profit sector's lowest withdrawal rates, at around 38%, compared to more than 50% sector-wide.
Sooner rather than later, Sweizer said, civilians will outnumber military-affiliated students at American Public perhaps by a significant margin — when he joined the company in 2005, just 20% of students were civilians, a number that has now doubled. That could significantly push up American Public's student loan default rate, which is now low, as more and more of its students finance their education with federal loans.
It could also change some other key parts of American Public's identity. While Boston credits the school's all-online profile as a key part of the company's ability to keep tuition prices low, it has recently considered offering programs that blend online and in-person learning, which is far more in-demand among civilians. And the school has stepped up its marketing to civilians through commercials and other ads.
But Boston promises that American Public won't lose its military roots. "We know that we have a very specific mission when it comes to who we serve," he said.
Molly Hensley-Clancy is a business reporter for BuzzFeed News and is based in New York. She covers the intersection of business and education.
Contact Molly Hensley-Clancy at email@example.com.
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