Apollo (APOL) Begins Internal Investigation; to Evaluate Enrollment Practices

Apollo (APOL) Begins Internal Investigation; to Evaluate Enrollment Practices

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University of Phoenix and its parent company, Apollo Group (NASDAQ: APOL), today acknowledged the industry findings of a United States Government Accountability Office study of for-profit college student recruitment practices, and reaffirmed their commitment to leading reform in industry transparency, standards and practices. Apollo Group also reiterated previously-announced plans detailing a number of new student protection initiatives at University of Phoenix.

“Over the past few years, Apollo Group has brought in a new management team with the goal of creating a world-class student experience at each of our universities, including University of Phoenix,” said Apollo Group Co-Chief Executive Officer and Apollo Global Chairman Greg Cappelli. “While we still have work to do, we have initiated a rigorous compliance process designed to improve oversight of our policies and procedures including our recruitment practices, and we are making significant improvements to the way we train and evaluate our student counselors.”

University of Phoenix has already implemented a number of robust student protections, including a proprietary, free Student Orientation Program, and effective new tools to help students make informed borrowing decisions. In addition, as previously announced, beginning November 1 of this year the University plans to roll out a new student counselor compensation framework, which has been in development and testing for more than a year.

“We recognize and share many of the concerns expressed by the U.S. Senate Committee on Health, Education, Labor and Pensions led by Sen. Tom Harkin (D-IA),” said Apollo Group Co-Chief Executive Officer Chas Edelstein. “However, in his closing remarks, Sen. Harkin publicized an internal training slide from the University of Phoenix that he may not have realized was from more than seven years ago. Our research indicates this outdated document had limited use at the University in 2003, and has not been used for many years since. Importantly, the slide does not reflect the values of the current leadership team who do not condone the attitude represented by this particular slide. ”

The GAO study sampled recruiting practices at a number of for-profit colleges, including University of Phoenix. Apollo Group takes the GAO’s findings very seriously and has initiated an immediate internal investigation. Apollo has strict policies to protect students during the enrollment process and throughout their tenure with the University, and when any violation of policy is discovered, it takes immediate and decisive disciplinary action up to, and including, termination of the employees involved.

Apollo Group is committed to serving the best interest of its students and has implemented or is preparing to implement several initiatives focused on student protection, including:

A comprehensive evaluation of enrollment practices, policies and procedures, including a systemic review of the University’s compensation model for employees who enroll and advise students;

A firm decision to change the way counselors are evaluated and compensated, including a commitment to completely eliminate admission targets as a component of compensation;

New ethics and compliance measures and policies including implementation of a digital call monitoring system to monitor tens of thousands of phone calls every day, between prospective students and counselors, for any evidence of false or misleading information;

A proprietary, free three-week program called University Orientation designed to help students with little or no college experience understand what it takes to succeed in the challenging academic environment at University of Phoenix, before taking on the burden of college debt;

A user-friendly financial aid calculator, designed to help students better understand the direct and indirect costs of their education and better manage debt levels, which is already resulting in a substantial reduction in the number of students who are borrowing at the maximum level; and

A dramatically restructured approach to marketing, including a reduction in the use of third parties in order to gain control and responsibility over student messaging and to ensure accurate information is being provided to students.
“We are committed to being leaders not only in the education of our students, but also in compliance with all applicable standards and regulations,” added Edelstein. “We will continue our work to enhance compliance, training, and monitoring procedures in the coming months, to ensure that students receive appropriate information to help them make informed choices about their higher education options.”
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