University Of Phoenix Sanctions Could Be Less Than First Expected

Analysts are expecting a less severe sanction against the University of Phoenix than originally expected.

Phoenix-based Apollo Group Inc., which operates UOP, disclosed this morning that a peer review report by the Higher Learning Commission recommended that UOP be placed on “notice,” which means the HLC could impose a less severe sanction than was expected earlier this year.

The HLC board is expected to give its decision June 27.

One of the issues revolves around creating more of an arm’s-length relationship between Apollo and UOP governance.

Trace Urdan, senior analyst for Wells Fargo Securities LLC, issued a flash comment today, saying more universities nationwide are placing greater emphasis on institutional independence.

“We understand University of Phoenix staff and faculty in interviews with HLC peer reviewers frequently attributed various institutional practices to decisions made by senior company management rather than its own faculty governance structure, prompting the governance concerns,” he said.

Apollo has made several structural changes this year to create more of an arm’s-length relationship with UOP. The HLC took those changes into consideration, resulting in its recommendation of “notice” status, Urdan said.

“This second opinion could allow the board to impose a less severe sanction,” he said.

According to HLC, “notice” is a public sanction indicating an institution is pursuing a course of action that, if continued, could make it out of compliance with HLC’s criteria for accreditation.

For Apollo, that means it will be required to submit various reports to HLC until June 2015 to show the accrediting agency that it is working toward resolving the matter.

Over the next month, the HLC board will review the peer review recommendations. It has the authority to accept some, all or none of those recommendations.

Apollo’s stock closed today at $18.79, closer to its 52-week low of $15.98 than its high of $38.34.


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