Apollo Group's Accreditor Has 'A Number Of Questions'

Apollo Group Inc.'s (APOL) University of Phoenix has received a letter from its accreditor raising concerns about how the school hires and trains admissions and financial aid officers, as well as what information it shares with students regarding enrollment, academics and job placement, according to a securities filing.

Apollo said it received a letter on March 29 from the Higher Learning Commission saying the materials that Apollo had provided "raised a number of questions" about the school's oversight of recruiting, admissions and financial aid practices. The school must respond to a list of specific questions by the end of April.

Apollo first disclosed in August that the Higher Learning Commission sent a letter asking for information on the school's compliance with accreditation standards. The letter was sent in the wake of a U.S. Government Accountability Office investigation that found representatives from a number of for-profit colleges, including University of Phoenix, using aggressive tactics to enroll new students.

Schools must be accredited by a recognized body, such as the Higher Learning Commission, in order for their students to be eligible for federal financial aid. Apollo derives nearly 90% of its revenue from such aid.

A committee from the accrediting group will meet with University of Phoenix officials in late May if it continues to have concerns about the school's practices, Apollo said. The committee will issue its final report in May or June, and according to the filing, it may recommend "corrective action" to the Higher Learning Commission at large.

Apollo said it expects to provide a thorough response to the questions in a timely manner. It noted that many of the questions the committee asked "are areas where we have been active in the past several quarters in further enhancing the student experience and our already strong student protections."

Last year, Apollo implemented an orientation program for students without prior college experience and changed the way it compensates recruiters.

Apollo's stock is down 3.4% to $40.00 premarket Thursday.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

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