Should For-Profit Colleges Be Allowed To Spend Taxpayers’ Money To Put Their Names On NFL Stadiums?

This past Sunday — and for the second time in seven years — the Super Bowl was played at a stadium carrying the University of Phoenix name. The for-profit online school paid more than $150 million to slap its brand on the stadium, with much of that money coming from taxpayers. Some groups say that for-profit schools should not be allowed to make such splashy marketing investments at a time when there are so many questions about the quality of education provided by for-profit institutions.

Over the past several years, legislators and consumer advocates have called for rules that would limit the amount of federal dollars for-profit colleges can spend on marketing each year.

“Taxpayers shouldn’t be funding marketing campaigns of for-profit companies” — Matthew Boulay, Exec. Director, Veterans’ Student Loan Relief Fund

While many schools, even nonprofits, spend money on advertising and recruiting, those expenses all pale in comparison to the $155 million the University of Phoenix shelled out in 2006 for two decades of naming rights for the Arizona Cardinals’ then-new stadium.

And though many stadia are branded with the names of for-profit companies, most of those stadium sponsors don’t get more than 90% of their revenue from federal funds. And that’s a serious issue for some consumer and veterans advocates.

Shortly before the 2015 Super Bowl, a number of veterans’ rights groups gathered thousands of signatures on a petition calling for the for-profit school to relinquish the stadium’s naming rights.

The groups see the $155 million that U. of Phoenix spent to put its name on the side of the stadium as just another “egregious and outrageous example of for-profit colleges’ worst case behavior.”

Matthew Boulay, executive director of the Veterans’ Student Loan Relief Fund, tells Consumerist that the petition is just one piece of a larger issue.

“This is part of an effort to get the for-profit colleges to think more about students’ education and less about their bottom line,” he explains. “I love the Super Bowl, the NFL and football, but we should be outraged that the University of Phoenix is exploiting this big game for marketing purposes.”

Follow The Money….

Image courtesy of T_____13

The groups believe such ostentatious marketing ploys wouldn’t be possible if it weren’t for the billions of dollars for-profit colleges receive from the federal government each year.

A 2012 report from the Senate Committee on Health, Education, Labor, and Pensions (HELP) found that the 15 largest for-profit education companies received 86% of their revenue from federal aid of some form. And those schools went on to spend $3.7 billion on marketing and advertising.

As for the University of Phoenix, the report found it spent an average $2,225 on marketing per student in 2010, while it only spent $892 per student on instruction.

The stark difference between the expenses put into marketing versus the amount of funds funneled to instruction is a major point of consternation for Boulay and other consumer advocates.

“The University of Phoenix spent an average of $2,225/student on marketing in 2010, but only $892/student on instruction.”

“This is very different from how community colleges operate,” Boulay says. “They don’t spend money marketing, they spend it on students, and stretch it as much as they can. That’s the problem we’re trying to highlight, this is unfair to veterans but also a gross misuse of taxpayer dollars.”

Because for-profit schools generally charge much higher tuition than community colleges, Maura Dundon, senior policy analyst with the Center for Responsible Lending, says it’s perceived that these institutions have more negative effects on students.

“We know that for-profit colleges spend a lot less on instruction and spend a lot more on marketing than community colleges, so that gives the impression that tuition money is going straight to marketing,” she says.

According to the HELP study, in 2010 the University of Phoenix charged 13 different prices, between $47,500 and $67,000, for a Bachelor’s degree in business, depending on the campus.

“I think that basically what this is stemming from is the fact that for-profit colleges can get such a tremendous amount of revenue from tuition, which is directly from federal sources,” Dundon tells Consumerist.

According to Department of Education data compiled by The Center for Investigative Reporting revenue from federal funds — especially tied to veteran benefits — is only rising, as the University of Phoenix received 92% of its revenue from taxpayers in 2014,

Of those funds, $3.7 billion came from federal tax dollars, $272 million of which were from Post-9/11 GI Bill benefits.

“What they are doing, it’s important to highlight,” Boulay tells Consumerist. “They are using money that could be spent on education and students, we’re talking hundreds of millions of dollars, to market themselves.”

What’s In A Name

When it comes to the University of Phoenix’s hefty investment in naming a professional football stadium, Boulay says it shows just how unbalanced for-profit colleges are in regards to revenue and expenditures.

“They don’t have a team but they have a stadium,” he says. “It’s just a gross example of how our tax dollars are spent.”

When ESPN reported about the naming rights deal in 2006, school officials said that the stadium branding was part of a marketing effort aimed at emphasizing the university’s success with students.

The University has not responded to Consumerist’s requests for comment on the petition and its marketing practices.

Since the naming agreement, the stadium and University name has been seen by millions of consumers at events like the Super Bowl, the Fiesta Bowl, Cardinals games, and even WrestleMania.

“This is the biggest stage for [University of Phoenix],” Boulay says. “Whether we like it or not, they are going to gain enormous exposure from having the game in their stadium. None of that benefits taxpayers or students.”

Can We Change Things?

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Protecting taxpayers from what Boulay calls “the worst example of the worst practices of an industry,” has been at the forefront of many legislators minds in recent years.

Illinois senator Dick Durbin has been working to rein in the for-profit education industry and curb its more predatory aspects since 2009.

“On Sunday, tens of millions of Americans tuned in to watch the Seahawks and Patriots battle in sports’ greatest spectacle, the Super Bowl,” Durbin tells Consumerist in a statement. “This year’s game was played at University of Phoenix Stadium. Is this really an expense we should tolerate from a company that is so heavily subsidized by taxpayers?”

Along with other senators, Durbin has introduced a number of measures that would prevent for-profit education institutions from spending billions of dollars in federal funds for marketing purposes.

In 2013, lawmakers took a second stab at curbing advertising by for-profit schools.

The Protecting Financial Aid for Students and Taxpayers Act, which didn’t make it out of committee in 2012, once again sought to prohibit the use of taxpayer money — in the form of things like Pell Grants, federal student loans, the Post-9/11 G.I. Bill, among others — for advertising, marketing and recruitment.

While the bill would have affected all schools that receive federal aid, whether the institutions are non-profit or for-profit, it’s really the for-profit education industry that stands to feel the impact of this legislation.

Shortly after the bill was introduced in 2013, 13 Attorneys General — representing Kentucky, New York, Arkansas, Illinois, Iowa, Maryland, Massachusetts, Minnesota, Nevada, North Carolina, Oregon, Pennsylvania, and Tennessee — wrote to the legislative leadership [PDF] in the hopes that the 2013 version of the bill will receive the full consideration of the Senate, rather than die a quiet death in committee.

More recently, legislators and advocates, like the veteran affair groups that petitioned for the renaming of University of Phoenix stadium, have focused on the amount of Department of Defense funds accumulated by for-profit colleges.

A report released last summer by former Iowa senator Tom Harkin found that for-profit colleges enrolled a record number of veterans and collected $1.7 billion in Post-9/11 GI Bill benefits during the 2012-13 school year.

Once again, the University of Phoenix was the top recipient of funds from veteran’s benefits.

While Harkin’s report didn’t focus on the school’s marketing expenditures, he did call for the establishment of rules to preserve the purpose of the GI Bill – to provide veterans with sound educational opportunities that lead to economic security and advancement.

So far, these attempts at legislatively bringing about change have fallen short, but groups like Boulay’s will continue highlight “outrageous” examples of marketing.

“Taxpayers shouldn’t be funding marketing campaigns of for-profit companies,” he tells Consumerist. “There’s no reason taxpayer dollars should support efforts of companies making huge profits.”