The Ever-Expanding U. of Phoenix

In the world of for-profit higher education, and higher education in general, the University of Phoenix has historically been viewed as the 800-pound gorilla.

As of Tuesday, it may be more like a 1,000-pound gorilla. As Phoenix’s parent company, the Apollo Group, reported its fourth quarter and annual earnings Tuesday, it announced that the university’s enrollment of degree-seeking students grew to 443,000 as of August 2009, up 22 percent from 362,000 in August 2008. The biggest growth in Phoenix’s enrollments, by far, came among students seeking associate degrees, which rose by 37 percent, to 201,200 from 146,500 in 2008.

About two-thirds of the university’s new students as of August are female, 27.7 percent are African-American, and about half are 30 or over.

The university attributed the sizable increases to a range of factors, including increased efforts in retaining students, expanded marketing, and the "current economic downturn, as working learners seek to advance their education to improve their job security or reemployment prospects." Many community colleges and several of Phoenix’s major peers in for-profit career education, including Kaplan Higher Education (21.9 percent) and Corinthian Colleges, Inc. (24.4 percent), have reported sharp upturns in student enrollments this fall.

But given Phoenix’s size and bulk, its increase produces startling numbers that — depending on how things formally shake out in enrollments this fall — would make the for-profit university bigger than the entire California State University System, which had 437,000 students in fall 2008 and was expected to limit enrollments this fall.

During a conference call announcing the filing of Apollo’s 10-K, its annual report to the Securities and Exchange Commission, company officials sought to emphasize the enrollment growth and its general strength in the market. But they spent much of the call fielding questions about three sentences in the 300-page report.

"During October 2009, we received notification from the Enforcement Division of the Securities and Exchange Commission indicating that they have commenced an informal inquiry into our revenue recognition practices. Based on the information that has been disclosed to us, the scope, duration and outcome of the inquiry cannot be determined at this time. We intend to cooperate fully with the Securities and Exchange Commission in connection with the inquiry."

Apollo officials provided little in the way of additional information about the inquiry, which is likely to focus on how the company accounts for revenue. For-profit colleges must adjust their financial statements to account for financial aid payments they refund to the federal government after students drop out of school.

The company’s stock dropped sharply in extended trading after the stock market closed.

Apollo also said that it had taken an $80.5 million charge against its fourth quarter earnings to cover the costs of a possible settlement in a federal whistle blower lawsuit that Apollo is in negotiations to settle.


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