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Apollo Group, Inc. (NASDAQ: APOL) is showing some more negative news in the fields of online education and for-profit education. The company submitted and SEC filing on Monday showing that its University of Phoenix subsidiary received a notice of Probation from The Higher Learning Commission on February 22. This is a commission member of the North Central Association of Colleges and Schools regarding the ongoing accreditation reaffirmation review of the University.
HLC is the university’s institutional accreditor and the end result is that the peer review team determined that the University of Phoenix is not in compliance with Criterion One of the Criteria for Accreditation, Core Component 1d, and certain of the related Minimum Expectations. These points all relate to the university’s administrative structure and governance.
The team has now recommended that HLC place the University on Probation status as the University of Phoenix has insufficient autonomy in relation to its parent (Apollo Group) as far as its board of directors management independence.
Some good news was included: the team found that University of Phoenix was in compliance with substantially all other Criteria of Accreditation, including the criteria associated with academic matters and student services, and, with one recommendation of a follow up report, all the applicable Federal Compliance Program Components. It was also noted that this team “specifically noted that the University is well resourced and innovative and has many strengths, including a high level of relevant student services and technology and systems that benefit students and provide a consistent approach to facilitate learning across its programs and facilities.”
Some of this data had been telegraphed by the company before but on a lesser scale. It previously disclosed in January that the HLC had informed University of Phoenix that the draft review report would include a recommendation that the University be placed on Notice status. The problem is that this “Probation” is worse than the “Notice” status. Apollo said in the filing that the HLC did not explain why the recommendation changed from Notice to Probation.
The University of Phoenix did say that it intends to challenge and appeal this formal Probation recommendation while it works with HLC to reach an agreement on an appropriate governance model. The draft report also identified other areas of concern which will require future reporting and follow-up activities by the University. While those were not said to be the basis of the Probation, these include retention and graduation rates, sufficiency of Ph.D program faculty research activity, the reliance on federal student financial aid, assessment of student learning; and documenting credit hour policies and practices with regard to learning outcomes of learning teams.
Here is the problem for the university and for Apollo:
If the Probation recommendation is approved, the draft report recommends a probationary period through the Fall of 2014, with the requirement that University of Phoenix submit a probation report at that time demonstrating that the specified matters have been ameliorated. In addition, the …read more
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