Some Relief For Apollo Group, But Accreditor Still Has Questions

Apollo Group Inc.'s (APOL) University of Phoenix has received notice from its accrediting body that the group had found no apparent evidence the school misrepresented itself to students or that admissions, recruiting and financial-aid procedures were inadequate or inappropriate.

Still, the Higher Learning Commission said there remain "significant questions" and areas the school should try to improve. The questions relate to student-loan default prevention efforts, career services for students pursuing associate's degrees and in other programs, financial-aid advising and student retention.

According to a securities filing, Apollo learned of the group's findings on Monday. It is scheduled for a comprehensive visit from the accreditor in March 2012, at which point the group will review those concerns.

Schools must be accredited by one of a handful of government-approved bodies, 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.

Apollo first disclosed in August that the accreditor had sent a letter asking for information on the school's compliance with accreditation standards. The request 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.

In late March, Apollo received a letter from the Higher Learning Commission saying material the school provided had raised "a number of questions" 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.

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

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