The largest for-profit university chain in the country announced Thursday their financial aid distribution will be reviewed by the U.S Department of Education.
The Apollo Group Inc., which owns the University of Phoenix chain, announced in a statement the review will begin in early December of this year.
“Collectively, University of Phoenix students receive more [federal] aid than any other institution’s student body and we disburse more [federal] student financial aid than any other educational institution in the U.S.,” the company said in a statement. “As a participant in [federal aid] programs, we are subject to, and we expect to experience, periodic program reviews of our [federal] program administration.”
For-profit colleges’ stocks dropped Thursday after the reviewing was announced, according to a report from the Associated Press. Apollo Group’s shares dropped 7.6 percent along with decreases from other for-profit companies including DeVry Inc., Corinthian Colleges Inc. and the Washington Post Co., which owns the Kaplan school chain.
Noel Radomski, director of the Wisconsin Center for the Advancement of Postsecondary Education, said the for-profit schools are receiving a lot of federal financial aid because a lot of low-income students who are eligible for federal Pell Grants attend the schools.
“The fact is that they are receiving enormous amounts of financial aid,” Radomski said. “However, that in itself is not evidence there is any wrongdoing on the part of the schools.”
Radomski said part of him wishes the states would take the responsibility of regulating the schools, however he said taking responsibility is difficult because education laws are like patchwork across the different states.
Wisconsin’s education laws date back to 1974 and 1977, Radomski said.
“It is OK that the feds are investigating this, but they have to treat the for-profits with respect and should not treat them like they are villains,” Radomski said. “Something is amiss … but we should just be looking into it and not make any policy at this point.”
This new review comes on the heels of another review of the Apollo Group by the Department of Education just five months ago were the company had to pay back $1.8 million dollars, according to a report from the Associated Press.
