The University of Phoenix, one of the most well-known online universities and largest by enrollment figures, amassed $1 billion in federal grants during the 2009-10 school year. The University of Phoenix was the first education institution (both non and for-profit) to receive such a significant amount of federal financial aid- and because of this the U.S.D.E has decided to take action.
The U.S.D.E. is set to investigate how the University of Phoenix used its aid last school year, how it was distributed and administered, and if protocol in the distribution process was maintained. The U.S.D.E. probe will begin in early December and will look into financial aid dealings from 2009-2010 and 2010 thus far. The Apollo Group Inc., which owns and operates the University of Phoenix system, noted recently that they were subject to a similar probe in February of 2009 and had taken appropriate action in order to “satisfy the department’s requirements.”
To many critics and even proponents of the for-profit online education sector, the U.S.D.E. investigation comes as no surprise. Recently, for-profits have taken a very public hit due to federal reports released regarding faulty recruitment policies and poor loan repayment rates of for-profit graduates.
Many also see Apollo Group’s recent report that more than 90% of the company’s revenue in 2012 will come from federal financial aid funds as a reason for the U.S.D.E. probe. Exceeding 90% will put the University of Phoenix in violation of a federal regulation known as the 90-10 rule; a rule which requires that no more than 90% of revenue comes from federal funding in the form of student financial aid.
Check out more here