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Posted by on Oct 17, 2010 in Education, Markets, TG Roundup

Realization About Universities of Fraud – It is About Time

For years I have been talking about the fraudulent practices at certain for-profit and publicly traded ‘universities.’ Finally the public is waking up to this naked truth. Last week, Apollo Group, parent company of The University of Phoenix has fessed up that enrollment were down due to the bad publicity. I would like to correct that: due to dissemination of truth. Nevertheless, it is about time!!

Business Week story:

Shares of Apollo Group Inc. plunged Thursday after the for-profit education company warned that student enrollments are likely to decline as its business changes to accommodate proposed regulations from the government.

Apollo shares slid $12.62, or 25.5 percent, to $36.88 in morning trading after hitting a year low of $36.43. The stock has traded between $36.74 and $76.86 over the last year.

Apollo, the owner of the country’s largest school chain, the University of Phoenix, withdrew its 2011 guidance on Wednesday because of the proposed changes.

The for-profit school sector has come under increasing scrutiny from lawmakers and regulators as loan defaults on financial aid. The Department of Education has proposed a new rule that could limit Apollo’s access to federal financial aid if too few of its students were repaying loans or if they had too much debt.

Matt Snowling of FBR Capital Markets said in a client note that he expects Apollo’s earnings and enrollment to drop over the next few years. He cut Apollo’s rating to “Underperform” from “Market Perform” and reduced its price target to $40 from $49.