DeVry To Be Subject Of U.S. Education Department Review
November 12 2010 - 9:51PM
Dow Jones News
NEW YORK (Dow Jones)-The U.S. Department of Education will
conduct a review of DeVry Inc.'s (DV) administration of federal
financial aid, as the government continues to step up its scrutiny
of how for-profit schools use the student loans and grants that
fuel the vast majority of their revenue.
The onsite review, set to begin Dec. 6, will look at the way
DeVry's namesake DeVry University administered federal student
financial aid for the 2009-10 and 2010-11 award years, the company
disclosed in a securities filing late Friday. An award year begins
on July 1 and ends on June 30 of the following calendar year.
DeVry is just the latest in a string of schools to be notified
of such "program reviews." Apollo Group Inc. (APOL) said last week
that the Education Department would be looking into financial aid
administration at its University of Phoenix, also beginning on Dec.
6. The schools both derive upwards of 80% of their revenue from
such aid.
The U.S. Government Accountability Office in August issued a
report showing that a number of for-profit colleges offered
misleading and even fraudulent information to undercover agents
posing as prospective students. DeVry was not among the schools
identified in the GAO report, though two University of Phoenix
campuses were.
The Health, Education, Labor and Pensions committee of the U.S.
Senate, which is holding a series of hearings on the schools, has
criticized the Education Department for lax oversight and poor
regulatory enforcement.
Meanwhile, Grand Canyon Education Inc. (LOPE) said in a filing
in July that it is the subject of a program review covering the
2008-09 and 2009-10 financial aid years. 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.
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.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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