The Apollo Group (the parent company of the University of Phoenix) revealed in its annual disclosure report to investors that the Security and Exchange Commission’s Enforcement Division is looking into its “revenue recognition practices.”

Inside Higher Ed is guessing that this has something to do with the way that the company counts financial aid dollars as revenue. Since it has to reimburse the federal government when a student receiving aid drops out, the company could be in some real trouble if the SEC finds that they have not been subtracting the reimbursements properly when reporting their “revenue.”

This comes at the same time as a lawsuit against the company for questionable marketing practices. The suit, filed under the False Claims Act, alleges that The Apollog Group owes the government billions of dollars for compensating recruiters based on the number of students that they enroll. This practice is illegal under United States education law and an important protection for both students, who could be pressured into expensive programs that will not ultimately help them, and for taxpayers, who often have to foot the bill. The University of Phoenix is the largest recipient of federal student loan dollars in the United States.

The company now has 443,000 students, which makes it bigger than the entire California’s entire state university system.

A version of this post was originally published on Students Over Banks.

Pedro de la Torre III

Pedro de la Torre III is the Advocacy Senior Associate for Campus Progress. The views expressed here are his own.