Business is booming at the University of Phoenix Online. Enrollment in its baccalaureate completion and graduate-degree programs is nearing the 50,000 mark (a whopping 70 percent increase from last year) with no sign of slowing. With an M.B.A. priced at $23,230–a third of Harvard's tuition, but more than two times in-state rates at Georgia Tech–the for-profit company brought in $64 million last fiscal year, allowing it to hire 170 staff members a quarter and 300 to 400 faculty members a month. "Our goal is to grow as fast as necessary to meet demand but keep the student ex- perience small, warm, and comfortable," says CEO Brian Mueller.

Few institutions have been as successful at bringing higher education to the Web as the University of Phoenix. In the mid-'90s, when online ed was being touted as "the next killer app," educators and businesspeople gleefully imagined hordes of students shelling out for expensive courses designed by superstar professors from brand-name colleges. They pictured a new kind of classroom, where streaming video, simulations, and other techno gimmicks would make ordinary instructors obsolete. But Phoenix went in the opposite direction, with intimate classes, practical lessons, and workmanlike technology. And at this stage in the development of online education, that's where students–and their dollars–are heading, too.

No frills. "People aren't looking for an ivory-tower experience," says Sean Gallagher, an analyst with Eduventures, a company that tracks the education industry. Fathom, a Web site funded by Columbia University and featuring courses from the University of Michigan, the University of Chicago, and the Woods Hole (Mass.) Oceanographic Institution, among others, has been reduced to offer-ing many classes free of charge. New York University and Philadelphia's Temple University have shut down their for-profit online divisions. A faculty committee at Williams College rejected a partnership with the Global Education Network, a Web-based learning company, after determining that each course would need to enroll as many as 3,000 students to break even. "We didn't think there was that large of an audience for the kinds of [liberal arts] courses that we specialize in," says Kim Bruce, a professor of computer science at Williams.

Indeed, the largest audience for online education has turned out to be working adults who need to hold on to their full-time jobs while they get their degrees. James Gillespie, 38, works 12 hours a day, seven days on and seven days off, as the supervisor of a trucking company's loading dock in Atlanta. "Attending a classroom facility is virtually impossible for me during the workweek," he says. Yet he had promised himself that he would start on his M.B.A. five years after he graduated from college. His only real option: going completely online.

No football. Nontraditional students like Gillespie, who last August enrolled at the University of Phoenix Online, make up more than 50 percent of the postsecondary student population, and their priorities are far different from traditional 18-through-22-year-olds. They can do without the football teams, the dorms, and the leafy quads. What they really want, says Arthur Levine, president of Columbia University's Teachers College, is convenience, strong student services like financial aid counseling and academic advising, and high-quality instruction. Schools like the University of Maryland-University College, Capella University, and Jones International University have built online programs around those needs. The most successful aim at students with specific career goals: the turf management certificate at Pennsylvania State University's World Campus, for instance, or eCornell's hospitality industry courses. "Why are there very few offerings of pure science degrees or pure liberal arts degrees?" asks Gary Miller, executive director of World Campus. "Because the kind of people we appeal to are students who are older and who really need a degree for their career."

The University of Phoenix staked out this ground back in 1976, when it began as a campus-based school offering adults convenient, career-oriented degrees. The school now has campuses in 40 states and, with 133,660 students (including those online), is the largest private university in the country. Students can get undergraduate and graduate degrees in such subjects as education, nursing, and business. In 1989, the university became one of the first schools to offer courses on the Internet. (Recently, the school introduced FlexNet, which combines online and classroom learning.) From the beginning, Phoenix avoided high-tech bells and whistles. Instead, the university looked for technology that would support its strength: small classes emphasizing interaction, writing, and application. Classes are heavy on E-mail, threaded discussions, and text files of lectures. "We did not look at technology and then try to figure out how to teach using that technology," says Mueller.

Most of the learning occurs in the communication between students and professors and among students themselves. Students and instructors are required to participate in online discussions (for which the students are graded) five out of seven days a week. According to Rita Kathleen Grandstaff, an M.B.A. candidate, the conversations can be quite challenging. Even more satisfying, says the 52-year-old resident of Claremont, N.C., are the social connections: "There are no boundaries to getting to know each other. Those quantifiers, those physical characteristics don't exist. It is very freeing." Grandstaff counts three of her fellow students as close friends.

Up close. Instructors also find the online format surprisingly intimate. Kenneth Sherman, a former financial services industry executive who began teaching for Phoenix three years ago, has his students develop a strategic plan for a company. Many design a plan for their own employer and then present it to management. Students often E-mail him to report how their presentations went. "I can't begin to tell you what it feels like to know that I am helping make change and enhance careers," says Sherman.

Instructors, who must have five years of recent professional experience and a master's or doctoral degree, undergo a month of unpaid training. If they pass that (and 25 percent of the applicants don't), candidates teach a course under the watchful eye of a mentor. Once hired, faculty receive performance reviews after four classes and then every year thereafter. When Teachers College's Levine visited the university's headquarters several years ago, he admits he was hoping to find a degree mill. Instead, he says, "I found an institution that did more to evaluate faculty performance than any college I have ever visited before."

It may be Phoenix's very nature as a for-profit university that led to its academic accomplishments. Faced with skepticism from accrediting bodies and traditional academics, the school developed a process of rigorous assessment to convince outsiders that what it offered was really an education. But today, the university uses that same assessment process–testing students when they enter a program and then at the end–to improve its offerings. "We were worried, frankly, about whether the online people would have got [the lessons] as well as the on-ground people," says Jay Klagge, associate vice president of institutional research and effectiveness. "The surprising thing was that in some cases they actually had it better." The most recent improvement? Adding simulations in business classes to demonstrate complex concepts that students weren't mastering. And to ensure that the educational product is the same no matter who teaches a class, the curriculum is developed by faculty at corporate headquarters and updated every two years to keep current with the marketplace. In the past year, the university has started to digitize its textbooks to allow more rapid changes.

Some experts argue that the best proof of Phoenix's quality is its profitability. "If they weren't doing a good job, if they didn't have a quality offering, they wouldn't be making any money," says Eduventures' Gallagher. And maybe he's right. Students don't feel much loyalty to a program that doesn't work for them. Gary Merica, a pharmacist in his second class with Phoenix's healthcare management program, has seen many of his colleagues drop out of classroom-based programs, and he himself quit a distance-learning program with the University of Idaho. "If it turns out not to be what I want," he says, "I won't continue with it." But for now, he's satisfied. The class discussions are richer than what he remembers from his traditional undergraduate days. Best of all, he can attend every class and still make it to his young sons' soccer games.