Does This Sound Familiar?

For those former FFELP lenders who lived through the Cuomo-Kennedy experience, this excerpt from The Apollo Group's recent 8K filing should come as no surprise. What started out as an investigation on student recruiting and the effects of education loan debt levels has turned into an overarching investigation that obviously intends to crack down on a sector that has helped so many people achieve their educational dreams when traditional colleges and universities were unable to do so.

"The request seeks information to more accurately understand how the Company uses Federal resources, including how it recruits and enrolls students, sets program price or tuition, determines financial aid including private or institutional loans, tracks attendance, handles withdrawal of students and return of Title IV dollars and manages compliance with the requirement that no more than 90% of revenues come from Title IV dollars. The request also seeks an understanding of the number of students who complete or graduate from programs offered by the Company, how many of those students find new work in their educational area, the debt levels of students enrolling and completing programs and how the Company tracks and manages the number of students who risk default within the cohort default rate window. In furtherance of this, the Committee has requested that the Company provide information about a broad spectrum of the Company's business, including detailed information relating to financial results, management, operations, personnel, recruiting, enrollment, graduation, student withdrawals, receipt of Title IV funds, institutional accreditation, regulatory compliance and other matters. The Company intends to cooperate with the Committee and to work with the Committee to provide the requested information in a manner that does not compromise the Company's sensitive proprietary operating and other information."


What contributions have the For-Profit Colleges brought to higher education?

(1) Night courses and online courses have given undergraduate and graduate students the ability to earn degrees without impacting their work days.

(2) Proximity campuses have made it easier for commuting students to attend classes.

(3) Technical and business certifications have enabled students to complete a curriculum that is typically not offered through traditional colleges and universities.

(4) Many traditional colleges and universities have established online courses as well as proximity campuses in direct response to what the for-profits have done.

Kaplan University has suspended enrollment at some of its campuses as a result of the investigation. Stock prices are falling at publicly traded corporate universities.

In my humble opinion, this investigation needs to center upon the recruiting aspects, and then quickly move on with the penalties before more campuses are shut down. If this investigation continues to drag on, the losers will not only be the shareholders ... but also the students and families.