Market Minute: University of Phoenix Accreditation at Risk

PHOENIX (AP) - Apollo Group Inc. (APOL) said Monday that its accrediting body was considering placing the company's University of Phoenix subsidiary on probation because of alleged deficiencies involving its administrative structure and governance.

Shares of the for-profit education company dropped 4 percent to the lowest level in 12 months.

Apollo Group said in a Securities and Exchange Commission filing that the Higher Learning Commission, its accrediting body, notified the company Friday that a draft report found that the university wasn't in compliance with certain accreditation criteria. A review team for the commission concluded that the university "has insufficient autonomy relative to its parent corporation," Apollo said in the filing.

university of phoenixApollo said on Jan. 8 that the commission told the university that a draft review report would include a recommendation that the university be placed on "notice status," a lesser sanction than probation. Apollo said Monday that the recommendation had been changed to probation. If the commission approves that recommendation, the probationary period would last through the fall of 2014.

Accreditation is necessary for the company to continue to be eligible for student loans, which make up much of its revenue.

Apollo said it plans to appeal the probation recommendation. There will be no change in the accreditation status of the university until the review and appeals are complete. The commission expects the appeals process will be complete by the end of June, Apollo Group said.

The company said in its filing that it believes "that it is neither remarkable nor improper for a parent corporation to exercise appropriate influence over its wholly owned subsidiary."

The commission also notified Apollo Group that a smaller subsidiary, Western International University, was found out of compliance with certain criteria. The Higher Learning Commission's review team recommended that Western International also be placed on probation. The draft report cited issues including the university's autonomy relative to the parent company, as well institutional financial stability and student learning assessment. Apollo Group intends to appeal that probation recommendation as well.

Shares of Apollo Group fell 75 cents to close at $17.83, after sinking as low as $17.81, a new 52-week low. In after-hours trading, the stock lost 43 cents to $17.40. It has fallen more than 60 percent over the last 12 months.


Increase your money and finance knowledge from home

Professional Vs Do it Yourself Investing

Should you get advice or DYI?

View Course »

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »

Add a Comment

*0 / 3000 Character Maximum

11 Comments

Filter by:
drdljohnson1

I agree!

February 26 2013 at 12:28 PM Report abuse rate up rate down Reply
drdljohnson1

I agree!

February 26 2013 at 12:28 PM Report abuse rate up rate down Reply
drdljohnson1

I agree!

February 26 2013 at 12:28 PM Report abuse rate up rate down Reply
domegrp

The only problem I saw with UOP is high-pressure recruitment techniques. "You won't find a job without the MBA", etc. Really high pressure to get students in.

February 26 2013 at 11:01 AM Report abuse rate up rate down Reply
1 reply to domegrp's comment
Katie

I think the drop out rate with online university's is much more related to student's who are looking for a diploma mill and when they realize that there is serious work involved, structure, and expectations they drop out and default on their loans.

February 26 2013 at 11:12 AM Report abuse rate up rate down Reply
Katie

I am surprised at the ignorance of these posts. Every University is in business to make money, surely you would not expect an online university to be any different?
I have been attending the University of Phoenix for four years, have paid 20,000 a year for my education, which is still less than Virginia Commonwealth University (my home college) and can guarantee that an online degree is just as strenuous, if not more tedious and intense than your conventional classroom. Instead of sleeping in an auditorium of 200 students, you are in an online classroom with 30 students and are forced to participate in the conversation with substantial posts and questions to meet attendance. 90% of the assignments are written papers and presentations, half of which are extremely challenging team assignments. Those naive and out of touch may enjoy trash talking this university; but, knowledge is power and ignorance is bliss. Those of you who choose to say these terrible things about UOP obviously have no idea what the definition of autonomy is. Well, let me share.... As defined by Merriam-Webster
1
: the quality or state of being self-governing; especially : the right of self-government
2
: self-directing freedom and especially moral independence
3
: a self-governing state
So, shouldn't the job of a parent company be to govern its divisions?
Well, Yes! Yes, this would be the job of any governing owner.
It sounds to me that those officials insistent on endoctrinating the minds of society are the ones whom have established this remarkable, unjustifiable claim.
Why don't you take the time to talk with some UOP students who have spend years up all night at the computer, going days without sleep during finals, and have lost valuable time with their families if their diploma was (simply purchased through a diploma mill)? Ask me about Freud, Skinner, Jung, Esyneck, Maslow, Watson, Adler, or any other founder of psychology and see if I am educated?
Your comments are shallow, uninformed, untrue, and ignorant at best. Through the process of my education, I have learned to investigate and get both sides of a story before implementing critical thinking and abstract thought to my analysis. I saddens me to see so many choose to jump on the bank wagon of uninformed assumption and narrow-minded criticism. Those who developed accreditied online universities filled a void and provided a platform for American's who did not go to college straight out of high-school an opportunity to get an education. The Higher Learning Commission did not find any problems with the academic integrity of this university, nor the attendance, grading scale, assignment structure, or accrediation of its professors.

February 26 2013 at 10:50 AM Report abuse rate up rate down Reply
eahoff39

Am I the only person here who thinks there's something wrong with a company being given the power to accredit one of its own universities?

Conflict of Interest, anyone?

February 26 2013 at 10:25 AM Report abuse rate up rate down Reply
rudimario

More times than not...if you show a prospective employer.....your sheep skin from the imagined U of Phoenix...., you will not get position you are applying for....and there of course, is a reason for that. lol If it is a dead end position.....you'll likely be hired and there is a reason for that too! lol

February 26 2013 at 10:11 AM Report abuse +1 rate up rate down Reply
farm4ourlife

Getting a "degree" from one of this online schools is about as worth while as getting a training position at McDonalds.

February 26 2013 at 10:10 AM Report abuse +1 rate up rate down Reply
rrusrjr2

At risk of seeing on line education becoming another overblown 'investigation' by Obamas molehills to mountains crew-I suspect many of those off/no campus schools are scams and should be investigated. Perhaps each state taking this on so that it doesn't become an 'Obamashian' show biz deal.

February 26 2013 at 10:03 AM Report abuse rate up rate down Reply
1 reply to rrusrjr2's comment
hockeyfan39

Duh duh dahoogey, duh duh. Does'nt make sense? It's comparable to your statement...

February 26 2013 at 10:20 AM Report abuse rate up rate down Reply
franzr00

I am not sure how this could be a surprise. It is run for the purpose of getting as much money out of as many as possible. The money for all the advertising has to come from somewhere.

Bachelor’s degree modified graduation rates declined from the 2010 Academic Annual Report to 31 percent for students who graduate within six years and 33 percent within eight years, both down by 3 percentage points in 2011.

Approximately 58 percent of first-time, full-time students who began seeking a bachelor's degree at a 4-year institution in fall 2004 completed a bachelor's degree at that institution within 6 years or 150 percent of normal completion time to degree.

According to the U.S. Department of Education, 21 percent of students who borrow to attend for-profit University of Phoenix defaulted on their loans within three years after leaving. That follows a national pattern, with default rates at for-profit schools more than double that of public and nonprofit competitors

February 26 2013 at 9:53 AM Report abuse rate up rate down Reply