A team of accreditors reviewing the University of Phoenix has recommended that the school be placed on probation, the university's parent said Monday, jeopardizing the reputation of the nation's largest for-profit college and its ability to collect federal student aid dollars crucial to the school's bottom line.
The University of Phoenix had a three-year default rate of more than 26 percent, according to the most recent federal data.
The Apollo Group, which owns the 319,000-student university, said in a filing with the Securities and Exchange Commission that a regional accreditation review team determined that the University of Phoenix had "insufficient autonomy" from its corporate parent -– a development that may prevent the university from achieving its "mission and successful operation."
The Apollo Group controls the leadership of the University of Phoenix board.
Apollo Group representatives said the company intends to appeal the recommendation.
The probation recommendation is not final. The board of the Higher Learning Commission, a Midwest college accrediting body, will likely make a final decision in June.
But the announcement signals that university accreditors are tightening reviews of for-profit colleges, which experienced explosive enrollment growth during the Great Recession as millions sought to improve their fortunes with a college degree.
All colleges must be accredited in order to remain eligible for federal student aid. Six regional accreditors collect fees from schools to consider them for approval, part of a peer-review process that dates back more than a century. Reviewers certify such things as academic courses and quality, and the accreditation standards are used in part to determine whether students can transfer credits from one institution to another.
Members of Congress in recent years have criticized the accreditation system as a rubber-stamp regulatory process that does little to protect taxpayer investments in higher education.
For-profit colleges such as the University of Phoenix get much of their revenue from federal aid programs, including subsidized student loans and Pell grants. The University of Phoenix last year received 84 percent of its revenue from federal financial aid programs, totaling more than $3.2 billion, according to company securities filings. The school's logo and advertisements can be seen on television commercials and highway billboards across the nation.
The for-profit college industry has come under fire in recent years, as the Obama administration, state attorneys general and lawmakers have questioned high tuition, low graduation rates and high rates of student loan defaults at many schools. More than 22 percent of students at for-profit colleges defaulted on federal loans within three years -- nearly twice the rate of students at public institutions, according to federal data.
Despite Phoenix's high default rates, plummeting enrollments, multiple government investigations, and intense media scrutiny the Apollo Group Inc., recently rewarded its retiring founder and CEO, John Sperling, what can only be characterized as a lavish retirement package. Sperling, who retired at the end of 2012 and now holds the title of chairman emeritus, will receive a $5 million “special retirement bonus” this month, according to a securities filing. He also gets a lifetime annuity—$70,833.33 a month— and ownership of the two company vehicles he used when serving as executive chairman. Apollo will also cover “reasonable out-of-pocket” medical- and dental-care coverage the 92-year-old incurs for the rest of his life.
In the past year, regional accreditors have cracked down on some for-profit institutions, including Ashford University, which in seven years morphed from a 300-student Catholic school in Iowa into a massive online institution serving nearly 90,000 students. Regional accreditors on the West Coast denied Ashford's bid for accreditation last year, arguing that the school had low graduation rates and was spending much more money on new student recruitment than educating current students.
The Higher Learning Commission has taken no formal action against the University of Phoenix. School officials said in the SEC filing on Monday that a review team found that the university's board was unable to "assure the university's integrity" and "make decisions necessary to achieve the institution's mission and successful operation."
The Apollo Group elects members of the University of Phoenix board of directors. The university's 11-member board includes four members who also serve on the parent company's board or senior leadership team.
If the Higher Learning Commission board decides to place the University of Phoenix on probation, the university would have up to two years to remedy problems. The school would remain accredited while on probation, meaning it would not be disqualified from receiving federal aid dollars.
Apollo Group executives mentioned the likelihood of negative findings from accreditors in a conference call with investors last month. The company wrote in Monday's public filing that if the school were placed on probation, its reputation "could be adversely affected, which in turn may negatively impact (the) ability to recruit and enroll students and to recruit and retain faculty and staff."
As the Obama administration and Congress have stepped up scrutiny of for-profit colleges, University of Phoenix enrollment dropped to 356,000 in August from more than 460,000 two years earlier, according to company securities filings. A quarterly filing last month said enrollment was 319,000.
Showing posts with label Apollo. Show all posts
Showing posts with label Apollo. Show all posts
Friday, March 1, 2013
Thursday, October 18, 2012
3 University of Phoenix campuses in Wisconsin will close
Yesterday the University of Phoenix announced that it was closing 115 locations across the country, a move that will affect 13,000 students. Three of these campuses are located in Wisconsin. The Madison, Brookfield and Grand Chute campuses have stopped enrolling students and eventually will close. At this point the Milwaukee campus will remain open.
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The closures come as parent company Apollo Group Inc. said earlier this week that its fourth-quarter net income tumbled 60%, hurt by higher costs and declining enrollment at the University of Phoenix. .
The University of Phoenix currently has about 328,000 students, down from a peak of more than 400,000. Following the closures, it will be left with 112 locations in 36 states, the District of Columbia and Puerto Rico.
Shares in the Phoenix-based company tumbled nearly 8% in after-hours trading.
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The closures come as parent company Apollo Group Inc. said earlier this week that its fourth-quarter net income tumbled 60%, hurt by higher costs and declining enrollment at the University of Phoenix. .
The University of Phoenix currently has about 328,000 students, down from a peak of more than 400,000. Following the closures, it will be left with 112 locations in 36 states, the District of Columbia and Puerto Rico.
Shares in the Phoenix-based company tumbled nearly 8% in after-hours trading.
Thursday, August 30, 2012
Follow the money: For-profit colleges pumping campaign money to foes of regulation
For-profit colleges and universities and their industry association gave at least $694,829 to political candidates through May 31, much of it to members of Congress who oppose greater regulation of the industry, including proposed curbs on aggressive recruiting of veterans with G.I. Bill benefits.
Among the industry’s principal givers are the Apollo Group (parent company of the University of Phoenix), which has contributed $259,901 to candidates; APSCU, which has given $184,500; and DeVry, Westwood College, Argosy and Art Institutes parent Education Management Corporation, and Everest parent Corinthian Colleges. The Art Institute and Everest have recently established operations in Milwaukee.
The for-profits have contributed to Republican presidential hopeful Mitt Romney and nothing to Barack Obama, whose administration has been largely seen as cracking down on them.
The Association of Private Sector Colleges and University, or APSCU, and its members gave to Senate and House members who have spoken out against the so-called gainful-employment regulation, under which educational programs would lose access to federal aid if their graduates fail to earn enough to repay their student loans. Last month, the federal government reported that five percent of career-training programs at both nonprofit and for-profit schools do not meet that test.
The rule is in limbo after a federal judge this month struck down the way the Department of Education calculated the ratio of debt to income, though he affirmed that it could proceed with the rest.
For-profit colleges gave financial support to lawmakers who wrote letters critical of the regulation or who attended a rally on the west lawn of the Capitol called to protest it, and to members of the Congressional Black Caucus, who said it would discriminate against nonwhite and low-income students.
Also receiving contributions were members of Congress who oppose restrictions on aggressive recruiting by for-profit colleges of veterans who use G.I. Bill benefits, criticized a General Accounting Office report about student-recruiting fraud, or voted against putting for-profits under the new Consumer Financial Protection Agency, and both Republican and Democratic members of the House and Senate education committees. In all, the for-profit schools backed at least 93 representatives and senators or candidates for Congress, 53 of them Republicans, according to federal disclosure forms.
Among those are Republicans George Allen and Josh Mandel, who are challenging Senator Jim Webb (D-Va.) and Senator Sherrod Brown (D-Ohio), respectively, both of whom have favored reforms to regulate the way veterans can be recruited by for-profit schools.
Members of the House who spoke at a 2010 rally against the gainful-employment regulation received campaign-finance contributions, however, including Robert Andrews (D-N.J.), Ted Deutsch (D-Fla.), Brett Guthrie (R-Ky.) and Glenn Thompson (R-Pa.). Guthrie and Thompson also criticized the GAO for an undercover investigation that found recruiting abuses at for-profit colleges, which the industry attacked for transcription errors and other problems, but whose conclusion was not changed.
House Oversight & Government Reform Chairman Darrell Issa (R-Calif.) also criticized the GAO report, as did House Education and the Workforce Committee Chairman John Kline (R-Minn.), and committee member Carolyn McCarthy (D-N.Y.). Issa, Kline and McCarthy also received campaign contributions from for-profit colleges or their industry association.
Other members of Congress who raised questions about the gainful-employment rule got money, too, including Jason Altmire (D-Pa.), Judy Biggert (R-Ill.), André Carson (D-Ind.), Gerry Connolly (D-Va.), Ron Kind (D-Wisc.), Tim Murphy (R-Pa.), former House Speaker Nancy Pelosi (D-Calif.) and Loretta Sanchez (D-Calif.) in the House, and, in the Senate, Minority Leader Mitch McConnell (R-Ky.), and Bill Nelson (D-Fla.).
Some members of the Congressional Black Caucus have attacked the gainful-employment proposal and other regulations as discriminatory, as for-profit colleges enroll disproportionate numbers of low-income students and nonwhites. Among Black Caucus members who got financial support from the for-profit colleges were Alcee Hastings (D-Fla.), Ed Pastor (D-Ariz.) and Edolphus Towns (D-N.Y.).
Members of the House Education and the Workforce Committee received donations, too, including Kline, Andrews, Biggert, McCarthy, Lou Barletta (R-Pa.), Virginia Foxx (R-N.C.), Trey Gowdy (R-S.C.), Joe Heck (R-Nev.), Duncan Hunter (R-Calif.), Mike Kelly (R-Pa.), Howard “Buck” McKeon (R-Calif.), Todd Rokita (R-Ind.), and Dennis Ross (R-Fla.).
So did members of the Senate Committee on Health, Education, Labor & Pensions, including Michael Bennet (D-Colo.), Orrin Hatch (R-Utah), Johnny Isakson (R-Ga.), Mark Kirk (R-Ill.) and Rand Paul (R-Ky.).
For-profits also gave to U.S. Rep. Jim Moran Jr. (D-Va.), whose brother Brian is chairman of the Virginia Democratic Party as well as APSCU’s vice president for government relations; Republican congressional candidate from Arizona Kirk Adams, an alumnus of the University of Phoenix; and Kristi Noem (R-S.D.), cofounder of the Congressional E-Learning Caucus.
At least one senator who’s been critical of for-profits received financial support anyway: Marco Rubio (D-Fla.) a potential vice-presidential running mate to Romney.
This post is based on an article by Jon Marcus in the Hechinger Report, July 12, 2012
Among the industry’s principal givers are the Apollo Group (parent company of the University of Phoenix), which has contributed $259,901 to candidates; APSCU, which has given $184,500; and DeVry, Westwood College, Argosy and Art Institutes parent Education Management Corporation, and Everest parent Corinthian Colleges. The Art Institute and Everest have recently established operations in Milwaukee.
The for-profits have contributed to Republican presidential hopeful Mitt Romney and nothing to Barack Obama, whose administration has been largely seen as cracking down on them.
The Association of Private Sector Colleges and University, or APSCU, and its members gave to Senate and House members who have spoken out against the so-called gainful-employment regulation, under which educational programs would lose access to federal aid if their graduates fail to earn enough to repay their student loans. Last month, the federal government reported that five percent of career-training programs at both nonprofit and for-profit schools do not meet that test.
The rule is in limbo after a federal judge this month struck down the way the Department of Education calculated the ratio of debt to income, though he affirmed that it could proceed with the rest.
For-profit colleges gave financial support to lawmakers who wrote letters critical of the regulation or who attended a rally on the west lawn of the Capitol called to protest it, and to members of the Congressional Black Caucus, who said it would discriminate against nonwhite and low-income students.
Also receiving contributions were members of Congress who oppose restrictions on aggressive recruiting by for-profit colleges of veterans who use G.I. Bill benefits, criticized a General Accounting Office report about student-recruiting fraud, or voted against putting for-profits under the new Consumer Financial Protection Agency, and both Republican and Democratic members of the House and Senate education committees. In all, the for-profit schools backed at least 93 representatives and senators or candidates for Congress, 53 of them Republicans, according to federal disclosure forms.
Among those are Republicans George Allen and Josh Mandel, who are challenging Senator Jim Webb (D-Va.) and Senator Sherrod Brown (D-Ohio), respectively, both of whom have favored reforms to regulate the way veterans can be recruited by for-profit schools.
Members of the House who spoke at a 2010 rally against the gainful-employment regulation received campaign-finance contributions, however, including Robert Andrews (D-N.J.), Ted Deutsch (D-Fla.), Brett Guthrie (R-Ky.) and Glenn Thompson (R-Pa.). Guthrie and Thompson also criticized the GAO for an undercover investigation that found recruiting abuses at for-profit colleges, which the industry attacked for transcription errors and other problems, but whose conclusion was not changed.
House Oversight & Government Reform Chairman Darrell Issa (R-Calif.) also criticized the GAO report, as did House Education and the Workforce Committee Chairman John Kline (R-Minn.), and committee member Carolyn McCarthy (D-N.Y.). Issa, Kline and McCarthy also received campaign contributions from for-profit colleges or their industry association.
Other members of Congress who raised questions about the gainful-employment rule got money, too, including Jason Altmire (D-Pa.), Judy Biggert (R-Ill.), André Carson (D-Ind.), Gerry Connolly (D-Va.), Ron Kind (D-Wisc.), Tim Murphy (R-Pa.), former House Speaker Nancy Pelosi (D-Calif.) and Loretta Sanchez (D-Calif.) in the House, and, in the Senate, Minority Leader Mitch McConnell (R-Ky.), and Bill Nelson (D-Fla.).
Some members of the Congressional Black Caucus have attacked the gainful-employment proposal and other regulations as discriminatory, as for-profit colleges enroll disproportionate numbers of low-income students and nonwhites. Among Black Caucus members who got financial support from the for-profit colleges were Alcee Hastings (D-Fla.), Ed Pastor (D-Ariz.) and Edolphus Towns (D-N.Y.).
Members of the House Education and the Workforce Committee received donations, too, including Kline, Andrews, Biggert, McCarthy, Lou Barletta (R-Pa.), Virginia Foxx (R-N.C.), Trey Gowdy (R-S.C.), Joe Heck (R-Nev.), Duncan Hunter (R-Calif.), Mike Kelly (R-Pa.), Howard “Buck” McKeon (R-Calif.), Todd Rokita (R-Ind.), and Dennis Ross (R-Fla.).
So did members of the Senate Committee on Health, Education, Labor & Pensions, including Michael Bennet (D-Colo.), Orrin Hatch (R-Utah), Johnny Isakson (R-Ga.), Mark Kirk (R-Ill.) and Rand Paul (R-Ky.).
For-profits also gave to U.S. Rep. Jim Moran Jr. (D-Va.), whose brother Brian is chairman of the Virginia Democratic Party as well as APSCU’s vice president for government relations; Republican congressional candidate from Arizona Kirk Adams, an alumnus of the University of Phoenix; and Kristi Noem (R-S.D.), cofounder of the Congressional E-Learning Caucus.
At least one senator who’s been critical of for-profits received financial support anyway: Marco Rubio (D-Fla.) a potential vice-presidential running mate to Romney.
This post is based on an article by Jon Marcus in the Hechinger Report, July 12, 2012
Tuesday, June 7, 2011
For-Profit College Stocks Soar in Response to Weakened Federal Regulations
Shares of for-profit colleges surged the most in six years after the Obama administration eased rules that would cut off federal aid to schools whose students struggle the most to repay their government loans.
Under the rules published last Thursday, companies including University of Phoenix owner Apollo Group Inc. won't risk losing their federal funding until 2015, three years later than under a previous draft, the Education Department said.
Under the rules published last Thursday, companies including University of Phoenix owner Apollo Group Inc. won't risk losing their federal funding until 2015, three years later than under a previous draft, the Education Department said.
Shares of Phoenix-based Apollo, the largest for-profit college company, rose $4.71, or 11%, to $46.90. The Bloomberg U.S. For-Profit College Index of 13 stocks rose 12%, the most since January 2005.
Calling the proposed rules a threat to their existence, for-profit colleges spent $6.6 million last year on lobbying and generated thousands of letters to the government in protest. The final version was delayed seven months, and some provisions were deleted or altered to favor the industry, said Jarrel Price, an analyst at Height Analytics in Washington.
"This is good for certain schools, and it's a home run for certain schools," he said. "Apollo is a clear winner."
Under the earlier proposal, loan-repayment rates at Corinthian Colleges Inc., Strayer Education Inc., Washington Post Co.'s Kaplan education business, DeVry Inc. and ITT Educational Services Inc. would have put them at risk of losing eligibility, according to Price.
Shares of Corinthian, of Santa Ana, jumped $1.07, or a whopping 27%, to $5.06. Strayer, of Herndon, Va., advanced $23.08, or 19%, to $144.95. Washington Post gained $20.46, or 5%, to $426.42. DeVry, of Downers Grove, Ill., rose $7.87, or 15%, to $61.86. ITT Educational, of Carmel, Ind., rose $14.94, or 21%, to $85.67.
Congress and state attorneys general are investigating the education companies' recruitment practices and use of government aid, which totaled $30 billion last year. The Education Department developed the rules to try to curb loan default rates at for-profit colleges that are twice as high as at public institutions and three times as high as at private nonprofit colleges.
The regulations seek to ensure that for-profit college graduates get jobs that allow them to repay their student loans. Although the harshest measures are being delayed, the regulations protect students from "exploitative" college programs that leave them with government-backed debt they can't repay, the Education Department said.
The rules "reflect input from the industry, and they're designed to give for-profit colleges every opportunity to reform without letting them off the hook," Education Secretary Arne Duncan said.
Under the rules, programs would remain eligible for federal aid if they meet at least one of three tests in a given year: at least 35% of former students are repaying their loan balance; yearly educational-debt payments of typical graduates account for a maximum of 12% of their total income; and those payments account for no more than 30% of their discretionary income.
Programs would have to fail all three tests in the same year for three out of four years before losing aid eligibility. The earlier draft would have cut aid to failing programs beginning next year.
About 5% of for-profit college programs are expected to lose eligibility, compared with 16% under the previous proposal, which gave colleges less time to comply.
For-profit colleges enroll about 12% of U.S. higher-education students, but they use about one-quarter of federal student grants and loans and account for 46% of student loan dollars in default, the Education Department said.
Calling the proposed rules a threat to their existence, for-profit colleges spent $6.6 million last year on lobbying and generated thousands of letters to the government in protest. The final version was delayed seven months, and some provisions were deleted or altered to favor the industry, said Jarrel Price, an analyst at Height Analytics in Washington.
"This is good for certain schools, and it's a home run for certain schools," he said. "Apollo is a clear winner."
Under the earlier proposal, loan-repayment rates at Corinthian Colleges Inc., Strayer Education Inc., Washington Post Co.'s Kaplan education business, DeVry Inc. and ITT Educational Services Inc. would have put them at risk of losing eligibility, according to Price.
Shares of Corinthian, of Santa Ana, jumped $1.07, or a whopping 27%, to $5.06. Strayer, of Herndon, Va., advanced $23.08, or 19%, to $144.95. Washington Post gained $20.46, or 5%, to $426.42. DeVry, of Downers Grove, Ill., rose $7.87, or 15%, to $61.86. ITT Educational, of Carmel, Ind., rose $14.94, or 21%, to $85.67.
Congress and state attorneys general are investigating the education companies' recruitment practices and use of government aid, which totaled $30 billion last year. The Education Department developed the rules to try to curb loan default rates at for-profit colleges that are twice as high as at public institutions and three times as high as at private nonprofit colleges.
The regulations seek to ensure that for-profit college graduates get jobs that allow them to repay their student loans. Although the harshest measures are being delayed, the regulations protect students from "exploitative" college programs that leave them with government-backed debt they can't repay, the Education Department said.
The rules "reflect input from the industry, and they're designed to give for-profit colleges every opportunity to reform without letting them off the hook," Education Secretary Arne Duncan said.
Under the rules, programs would remain eligible for federal aid if they meet at least one of three tests in a given year: at least 35% of former students are repaying their loan balance; yearly educational-debt payments of typical graduates account for a maximum of 12% of their total income; and those payments account for no more than 30% of their discretionary income.
Programs would have to fail all three tests in the same year for three out of four years before losing aid eligibility. The earlier draft would have cut aid to failing programs beginning next year.
About 5% of for-profit college programs are expected to lose eligibility, compared with 16% under the previous proposal, which gave colleges less time to comply.
For-profit colleges enroll about 12% of U.S. higher-education students, but they use about one-quarter of federal student grants and loans and account for 46% of student loan dollars in default, the Education Department said.
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