Dan Walters: University of Phoenix's political tale runs full circle

It's now called the University of Phoenix, but originally it was an off-campus arm of California's Saint Mary's College – until it ran into accreditation problems 35 years ago.

At one point, California's regional accreditation organization, the Western Association of Schools and Colleges, placed Saint Mary's on probation and singled out the program's founder, John Sperling, for criticism.

Sperling reacted by moving the operation to Phoenix and, under its new name, expanded it into a nationwide, for-profit purveyor of college-level instruction, becoming a billionaire in the process.

California became a major market for Phoenix's offerings, but during the 1980s, the company also struggled for legitimacy because it was not accredited by the association.

The University of Phoenix and its parent corporation, Apollo Group Inc., made periodic efforts to exempt it from this accreditation with legislation to recognize its accreditation by the Chicago-based North-Central Association of Colleges and Schools, which oversees Arizona.

Even though the Legislature recast oversight of private schools on several occasions, it did not grant Apollo an exemption, subjecting it to regulation by the state's Bureau for Private Postsecondary and Vocational Education.

The University of Phoenix became a big part of an umbrella lobbying organization called the Accredited Out-of-State Colleges and Universities in California, which pushed hard for the exemption.

Meanwhile, Sperling and his son Peter became major donors to political campaign treasuries in the state – mostly to Democrats – and spent millions of dollars on their pet ballot measures promoting solar energy and loosening California's tough criminal laws.

Finally, in 2003, John Burton, then the president pro tem of the state Senate, quietly slipped a bill through the Legislature that gave Apollo and other out-of-state colleges the right to tell prospective California students that they were fully accredited.

Since then, the Legislature has continued to kick around regulation of private schools in response to complaints that many reap huge fees from students who take out federally backed loans, but have low graduation and job-placement rates.

Former Gov. Arnold Schwarzenegger vetoed two regulation bills that he said were inadequate.

And what of the University of Phoenix?

Apollo continues to operate, but it has lost two-thirds of its stock market value in the last year. It revealed this month that the agency whose recognition it had sought in California, now called the Higher Learning Commission, has told it to expect accreditation sanctions of some kind.

That's no small thing, since 80 percent of its income comes from federal student loans. What goes around comes around, as they say in politics.