Apollo Group's Phoenix To Be Subject Of Ed Dept Program Review
November 04 2010 - 9:32AM
Dow Jones News
The U.S. Department of Education will conduct a review of Apollo
Group Inc.'s (APOL) University of Phoenix, the latest in a series
of investigations for the nation's largest for-profit college.
The review will look at the school's administration of federal
student financial aid programs for the award years 2009-2010 and
2010 to present, the company said in a securities filing.
University of Phoenix derives more than 80% of its revenue from
Title IV federal student aid. An award year begins on July 1 and
ends on June 30.
Apollo last week disclosed that the Securities and Exchange
Commission's Enforcement Division has asked for information on
Apollo's insider trading policies and practices, part of a larger
informal inquiry first disclosed in October 2009. The SEC is
looking at the company's policies alongside a chronology of its
internal processing and availability of information regarding a
prior program review. That review, begun in February 2009, was
completed this past June with Apollo posting a $126 million letter
of credit after the report cited the untimely return of some
unearned funds. Apollo also reimbursed $660,000 to the Education
Department.
Representatives from Apollo weren't immediately available for
comment.
Separately, the Florida Attorney General's office last month
launched a civil investigation of University of Phoenix and seven
other for-profit schools, seeking information on allegations
regarding financial aid misrepresentations, deceptive practices in
recruitment, enrollment, accreditation, placement and other
concerns.
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. Reviews often drag on for months
or even years with little or no communication from the Department
of Education.
Grand Canyon Education Inc. (LOPE) said in a filing in July that
it is the subject of a program review covering the 2008-2009 and
2009-2010 financial aid years. Also, Corinthian Colleges Inc.
(COCO) is in the process of responding to a spring report on its
Everest College Phoenix, in which the Education Department
characterized certain findings as misrepresentations and a breach
of fiduciary duty, the company said. The Education Department has
also conducted site visits, the first step in a program review, at
other Corinthian campuses within the last few years.
Shares of Apollo were off 2.1% to $37.65 in recent pre-market
trading.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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