University of Phoenix could get schooled
The Higher Learning Commission recommends putting the for-profit college on probation for being more focused on earnings than education.
The Higher Learning Commission, a Midwest college accrediting body, recommended Monday that the 319,000-student University of Phoenix be placed on probation for having "insufficient autonomy" from its Apollo Group (APOL) parent company and for its inability "to assure the university's integrity." Translation: The for-profit schools are paying more attention to the "for-profit" part of their name than the "schools" portion.
In a filing with the Securities and Exchange Commission, Apollo Group says it plans to appeal the decision. It added that its parent-company relationship with the University of Phoenix is "customary" and that it's "neither remarkable nor improper for a parent corporation to exercise appropriate influence of its wholly-owned subsidiary."
For a subsidiary, perhaps, but most subsidiaries don't provide 90% of their parent company's revenue by wooing federal funding under the premise that they're providing education. That hasn't sat well with President Barack Obama's administration, Congress or state attorneys general who question for-profit institutions' high tuition, low graduation rates and high number of student loan defaults.
The University of Phoenix alone took 84% of its revenue from federal financial aid programs last year. That's $3.2 billion in taxpayer money, according SEC filings. Meanwhile, the school shells out for commercials, highway billboards and $155 million through 2026 to keep its name on University of Phoenix Stadium in Glendale, Ariz., home field for the NFL's Arizona Cardinals. Federal data show that not only do 22% of for-profit college students default on their loans -- which is more than double the rate of public colleges -- but 26% of University of Phoenix students defaulted on federal loans within the last three years.
The Higher Learning Commission's decision isn't final and won't be until June, but putting the University of Phoenix on probation would be a big step toward stripping it of the accreditation necessary to receive federal aid.
Apollo Group saw this coming after University of Phoenix enrollment dropped from 460,000 in 2010 to 319,000 last month. In its SEC filing, the company notes that if it's 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."
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