DL Truth: Distance Learning Truth

Quote:Updated January 9, 2013, 6:41 p.m. ET
Apollo Warns of Sanction for University of Phoenix
By JOAN E. SOLSMAN

Apollo Group Inc. warned that the group that accredits its University of Phoenix is expected to recommend sanctioning the for-profit school by putting it "on notice" for unspecified areas of concern.

Worries about Apollo's accreditation and growth prospects helped stoke a selloff in the stock Wednesday. Shares in the company fell 7.8%, or $1.63, to $19.32 at 4 p.m. on the Nasdaq Stock Market NDAQ +0.30% .

Apollo has lost two-thirds of its market value in the past year, as it and others in the sector deal with flagging enrollment and scrutiny of their practices. University of Phoenix offers courses online and at 115 campuses and smaller learning centers across the country.

The Higher Learning Commission, a regional agency that accredits the University of Phoenix, has been working on a once-a-decade evaluation to reaffirm the school's accreditation. The agency informally advised Apollo Tuesday of a coming draft report, and Chairman and Chief Executive Gregory Cappelli said that evening that he expects the report to recommend putting the school "on notice" for "several areas of concern."

Accreditation is essential for schools to be eligible for Title IV student loans from the U.S. Department of Education, which represent the vast majority of the schools' revenue. Apollo booked more than 80% of its revenue from the loans in the latest fiscal year, as calculated under a rule that limits how much schools can receive.

Being "on notice" means the Higher Learning Commission found some course of action at a school that could result in it failing an accreditation standard.

It is less harsh than being put on probation, but both types of sanction require the institution to take corrective action and provide a written report.

Because Apollo doesn't have the draft report yet, Mr. Cappelli didn't elaborate about what the problem areas were. "When we get that information, there'll be a process to review it and to disclose as appropriate," he said during a conference call to discuss quarterly results.

In a note downgrading Apollo, Morgan Stanley analyst Suzanne Stein said recent areas of scrutiny at the university include faculty changes, student-to-teacher ratios and student default rates on loans.

The University of Phoenix's accreditation was under no immediate threat. Apollo has the chance to write to the agency to dispute any factual errors that company sees in a recommendation, should it come. If it is sanctioned, the notice period typically lasts one year. The Higher Learning Commission may withdraw accreditation if it ultimately finds the school isn't compliant, but institutions have the right to appeal.

The company is still at a "very early stage" in the review process with the commission, said Mark Brenner, chief of staff for Apollo Group and senior vice president of external affairs. He added this accreditation reaffirmation has been the largest the school has undergone.

First Analysis analyst Corey Greendale, who also downgraded Apollo, said he believes the University of Phoenix will likely remain accredited in the end, but the additional uncertainty might weigh on its stock.

Shares in other for-profit educators fell Wednesday as the largest among them faced the accreditation uncertainty. DeVry Inc. DV -0.63% stock sank 4.9% on the New York Stock Exchange. Strayer Education Inc. STRA -0.66% and Grand Canyon Education Inc. LOPE -1.23% declined 7.8% and 3.3%, respectively, on the Nasdaq market.

Similar accreditation worries have plagued the sector. Last summer, Bridgepoint Education Inc.'s BPI -1.37% flagship college was denied initial accreditation from another agency for failing to comply with certain standards, and Career Education Corp.'s CECO +4.29% stock gyrated when accreditation came under question.

Like peers, Apollo has been tightening its practices after facing public criticism over graduates' debt loads and job prospects.

On Tuesday, Apollo said its earnings and revenue fell in the company's fiscal first quarter as degreed enrollment declined again, prompting a downward revision to the top of its revenue guidance.

Quote:...recent areas of scrutiny at the university include faculty changes, student-to-teacher ratios and student default rates on loans.

(01-11-2013, 09:57 AM)bigfoot Wrote: [ -> ]I wonder how this school has remained regionally accredited, in light of it's shady business practices not to mention the half-assed education they provide...

(01-11-2013, 05:45 AM)Albert Hidel Wrote: [ -> ]

Quote:...recent areas of scrutiny at the university include faculty changes, student-to-teacher ratios and student default rates on loans.

Could having a malingering union goon on faculty have had anything to do with it? Or not having enough malingering union goons on faculty?

Rich Douglas Wrote:I've got some experience in this area. I was a full-time Campus Chair for a year at UoP and an adjunct for an additional 2 years. I don't know what the HLC is concerned about, but here's my take:

Often, when a school gets in trouble with an RA, it's due to money, management, or both. Money probably isn't the case here.

UoP 's learning model, while admirable in theory, is not so hot in practice. Classroom students are limited to 20 hours per course (undergrad) or 24 hours (grad). The rest of their learning takes place in self-directed learning teams. There are so many problems with executing and controlling this, I don't know where to begin. Let me just say that basing an entire university on that model is stupid. (The online equivalent isn't any better.)

UoP originally didn't accept students who had not completed 2 years of school. Then it limited enrollments to those with at least 20 s.h. elsewhere. Then it finally went after the people who'd never been to college at all. But as an open-enrollment school, that means that a whole lot of people (tuition-paying, BTW) who should not be there are attending and paying. And since the first 5 classes for these people are totally easy, and since it takes enrolling in only 3 to reach UoP 's break-even point for students, they're usually okay. (Dropping enrollments might have an effect on the break-even point. My data is from a time when UoP 's enrollments were about 200K.) So....

I wouldn't be surprised if the HLC's criticisms are focused on that new-to-college group. The drop-out rates for them are horrendous. New MBA students, meanwhile, were--IMHO--ready to go. I taught in both undergraduate and MBA programs and the difference was remarkable. So was the difference between students starting their UoP bachelor's programs and those near completion. Night and day. Part of that was the difficult process of earning a degree this way. The other part was that students got better as they went along. But a huge part was the weeding out of students early in the program--students who'd paid good money but who never should have been there to begin with. Students who had already paid for several courses and no longer represented a loss to UoP .

We'll see.

(01-12-2013, 03:08 AM)bigfoot Wrote: [ -> ]...He basically learned nothing while attending this university and he was nearly 25,000 dollars lighter after he paid his education "bill"...

(01-12-2013, 03:08 AM)bigfoot Wrote: [ -> ]...he does have the "sheepskin" framed in his office though...

(01-12-2013, 07:08 PM)ham Wrote: [ -> ]I have never been a student, but there was something in those few phone calls that alerted my BS radar.

Quote:
Possible Probation for Phoenix
February 26, 2013
By Paul Fain

The University of Phoenix’s accreditation woes are more serious than the for-profit giant had been told to expect, with a site team from its regional accreditor recommending last week that the university be placed on probation because of concerns about a lack of autonomy from its holding company, the Apollo Group.

The Higher Learning Commission of the North Central Association of Colleges and Schools last year wrapped up its accreditation review of Phoenix. In January the accreditor informed Apollo that it had identified unspecified problems that would be disclosed in a forthcoming draft report. Company officials told investors that it would probably be placed “on notice,” a less severe penalty than probation.

But the report, which Apollo received last week, surprised company officials and industry analysts alike. It described “alleged administrative and governance deficiencies” that led to the call for probationary status, according to a corporate filing Apollo released Monday.

“Specifically, the review team concluded that the University of Phoenix has insufficient autonomy relative to its parent corporation and sole shareholder, Apollo Group, Inc., to assure that its board of directors can manage the institution, assure the university’s integrity, exercise the board’s fiduciary responsibilities and make decisions necessary to achieve the institution’s mission and successful operation,” the company said.

The university produces more than 90 percent of Apollo’s revenue. And company officials said Phoenix had become more autonomous since its last review by the commission, which was in 2002. The company also said its management structure is “customary” and designed to maintain the operational and financial well-being of its subsidiary, which enrolls 320,000 students.

“We believe that it is neither remarkable nor improper for a parent corporation to exercise appropriate influence over its wholly owned subsidiary,” Apollo officials said.

Last Friday was the first time Phoenix had heard it might be placed on probation, according to the filing. “The HLC has not explained why the recommendation changed from notice to probation.”

While the commission found other problems with Phoenix, Apollo officials said those issues were not the basis for the probation recommendation. The other areas of concern include retention and graduation rates, reliance on federal financial aid, assessment of student learning and documentation of credit hour policies “with regard to learning outcomes of learning teams,” the company said. Those problems will require future reporting and follow-up activities.

Western International University, which Apollo also owns, received a similar probation recommendation.

The commission’s Board of Trustees will consider whether to impose the suggested probation. Apollo officials said they plan to challenge and appeal the review team’s recommendation.

Probation status would mean that the commission had determined that Phoenix is out of compliance with criteria for accreditation. The probation could last up to two years, and would require another site visit. That’s a more laborious process than getting out from under “on notice” status, which can be accomplished with corrections and a written report.

Cracking Down?

Politicians and critics of for-profits have been pushing for a tougher approach by accreditors to the industry. The Higher Learning Commission in particular has faced scrutiny for its accreditation reviews of for-profits, most notably with a 2011 U.S. Senate hearing in which Sen. Tom Harkin, an Iowa Democrat, grilled Sylvia Manning, the regional accreditor’s president.

Harkin, a frequent antagonist of for-profits, was particularly incensed by the commission’s approval of Ashford University, which is owned by Bridgepoint Education. Last year, Bridgepoint failed in a bid to switch its accreditation to the Western Association of Schools and Colleges, and is now in the process of responding to a range of subsequent concerns raised by the Higher Learning Commission.

Manning had herself advocated for a more aggressive review process after she took over the commission in 2008. But the heat on accreditors has continued. For example, Sen. Dick Durbin last year wrote to Manning and urged “great care in considering the integrity and quality of the programs” at Phoenix. The Illinois Democrat also asked the commission to make public the results of its review of the university.

“Many of us in Congress are working to help raise the standards of postsecondary education. The propriety sector has grown faster than any other sector and warrants careful scrutiny,” Durbin wrote in the letter. “We have limited federal resources for student financial aid, making it imperative that participating institutions offer their students quality education, clear information about their financial obligations and appropriate educational support.”

Trace A. Urdan, an industry analyst with Wells Fargo, said the commission’s autonomy concern is based on a desire for the university’s academic mission to be protected from the more financially oriented interests of the parent company. Ashford is facing similar scrutiny.

However, Urdan, whose analyses often defend the for-profit industry, said Phoenix has become more autonomous and that the team’s report “seems to reflect a new sensibility on the part of the HLC” rather than any changes by Phoenix. Urdan said accreditors had been put on notice by the federal government, including last month by President Obama, and that they are feeling the pressure. "They need to look like they're incredibly tough," he said.

Company officials said the draft report included a number of positive findings, including references to the university being “well resourced and innovative,” and praise for its high level of student services and related technology.

Phoenix, like most for-profits, has seen its enrollment tumble in recent years. Some of that decline has been self-inflicted, however, as the university seeks to improve its student retention. For example, Phoenix recently began a free trial enrollment period, during which the university and students themselves can determine whether they are ready for college-level work.

The probationary status, if approved, will no doubt be a challenge for Phoenix. News last month of the possible “on notice” sanction took a big whack at Apollo’s share price. And the more severe probation would mean that Phoenix would need to reference its probationary status in all statements about its accreditation.

Company officials said they were reviewing the report and would work closely with the commission to address its concerns. The commission said it expected an appeals process to be completed by July, according to Apollo.

“We are confident that the University of Phoenix and Western International University will be successful in achieving institutional reaffirmation,” Mark Brenner, a spokesman for Apollo, said in a written statement.

Jimmy Fallon Wrote:The online college, the University of Phoenix, could lose its license because of questionable billing policies. Which makes sense when you find out they got their accounting degree from the University of Phoenix.