Shares of Apollo Group Inc., the company that owns the for-profit University of Phoenix, fell almost 6 percent yesterday. The downswing came after the company received a report from the U.S. Department of Education ordering the school to return federal loan money. According to a Reuters article:
According to DoE’s regulations, education institutions have to return unused Title IV funds within a stipulated time frame if a student drops out of a program.
The company said if University of Phoenix is not granted relief from this requirement, it would be required to post a letter of credit of about $125 million by January 30.
Apollo, which has been plagued by regulatory concerns over the past several months, believes its liability resulting from the findings will be about $1.5 million.
The University of Phoenix, like other schools, must return federal student loan money if the students using that money drop out of the program. Phoenix has yet to return the money. The Apollo Group said it would “talk to the DoE regarding these regulations.”
Almost 90 percent of University of Phoenix’s revenue comes from federal financial aid.