Apollo Group Warns of Sanction by U. of Phoenix’s Accreditor

The Higher Learning Commission of the North Central Association of Colleges and Schools has been conducting a review of the University of Phoenix’s reaccreditation, and the for-profit college’s parent company expects that a coming draft report from the accreditor will recommend that the institution be placed “on notice.” The company’s chairman said the report was expected to identify “several areas of concern,” although he did not elaborate on the nature of those problems since Apollo had not received the draft report. Being placed “on notice” is a sanction that is less severe than being placed on probation.

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 MS +2.89% 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.

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