DeVry To Be Subject Of U.S. Education Department Review

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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