Grand Canyon Education To Be Subject Of Ed Dept Program Review
July 08 2010 - 5:26PM
Dow Jones News
Grand Canyon Education Inc. (LOPE) will be the subject of a U.S.
Department of Education program review investigating the for-profit
college's administration of federal student aid, the school
disclosed in a filing with the Securities and Exchange Commission
late Thursday.
The school derived about 83% of its revenue from federal funds
in 2009, according to an analysis by BMO Capital Markets.
According to the SEC filing, Grand Canyon was notified on July 6
of the Education Department's intent to conduct a review. A
representative from Grand Canyon wasn't immediately available for
comment and a Department of Education spokesman had no immediate
comment.
Program reviews aren't uncommon and can be conducted at any
school that receives Title IV federal aid, but being the subject of
one can weigh heavily on a school no matter the outcome. Reviews
often drag out for months or even years with little or no
communication from the Department of Education, Grand Canyon warned
in its filing.
Shares of Grand Canyon were off 4.1% after-hours to $21.47 after
closing up 1.5%. The company's stock is up nearly 18% so far this
year.
"If the [Department of Education] were to make significant
findings of non-compliance in the final program review
determination, it could have a material adverse effect on the
Company's business, results of operations, cash flows, and
financial position," Grand Canyon said in the SEC filing.
Other for-profit schools have been subjects of program reviews,
too, as the Department of Education comes under pressure to ensure
its loans are being used properly.
Corinthian Colleges Inc. (COCO) in May disclosed that it had
received a program review report on its Everest College Phoenix and
was conducting an investigation into the findings, some of which it
disputed. The report found the school breached its fiduciary duty
and made misrepresentations to students regarding its financial aid
administration, according to an SEC filing. It will respond to the
report, and then a final determination letter will be issued by the
Department of Education.
More recently, Apollo Group. (APOL) announced that its
University of Phoenix received the final determination linked to
its February 2009 program review. The school had to post a $125
million letter of credit after the report cited the untimely return
of some unearned funds. Apollo also made $660,000 in reimbursements
in its second fiscal quarter.
Grand Canyon said in its filing that its policies and procedures
are planned to comply with federal regulations and it would work to
resolve any compliance issues, were any to be found.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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