George Thog

George Thog asked to quantify the impact of suspicious activity controls on slower fiscal year 2026 enrollment growth, distinguishing between less suspicious activity and friction on legitimate enrollments. He also questioned what provides confidence that unusual enrollment activity won't spike again.

Answer

CEO Chris Lynne stated that precise quantification is difficult but explained that advanced algorithms effectively identify and deter suspicious activity early. Moving controls to the top of the funnel in Q4 2025 significantly improved enrollment productivity and marketing efficiency by reducing bad actors. While initial friction for legitimate students existed, calibration has reduced it. Confidence in future control stems from continuous data analysis, algorithm updates, and the Department of Education's public acknowledgment of FAFSA control breakdowns, with expected improvements in their new FAFSA process. Meetings with the Department reinforced confidence in their own control structure.

George Thog asked Phoenix Education Partners to quantify the impact of suspicious activity controls on enrollments, distinguishing between reduced suspicious activity and friction on legitimate enrollments, and to explain what gives management confidence that unusual enrollment activity (UEA) won't spike again in the future.

Answer

CEO Chris Lynne stated that while specific quantification is difficult, the company's advanced algorithms are highly effective at identifying and deterring suspicious activity. He explained that early in the year, controls deeper in the enrollment process caused productivity challenges, but moving these controls to the top of the application funnel in Q4 significantly improved efficiency and reduced friction for well-intended students. Lynne expressed confidence in the ongoing effectiveness of their constantly updated algorithms and control structure, which has demonstrated consistency since Q3. He also noted that the root cause of the UEA spike was a breakdown in the Department of Education's FAFSA identity verification process, which the DOE has acknowledged and is addressing, expected to mitigate the issue for the entire higher education sector.