This says it all. The largest fine ever handed out by the US Department of Education!
University of Phoenix fined for using pressure sales
September 15
The nation's largest for-profit university has been fined $9.8 million by federal regulators who concluded it was so focused on boosting enrollment that it pressured recruiters to accept unqualified students.
The fine against the University of Phoenix, which opened classrooms in Indianapolis this year, was the largest ever imposed by the Department of Education. The federal investigators' 45-page report detailed several examples of compensation and sales practices that the government said were illegal or unethical, according to Tuesday's editions of The Arizona Republic, which obtained the report.
The Department of Education oversees federal financial aid programs and has strict rules against paying recruiters based on the number of students they enroll. It found the school evaluated recruiters and set salary incentives for them based on how many students they signed up and then tried to hide those practices from the government.
Enrollment counselors interviewed by regulators told of a glassed-in isolation room where underperformers were put on display to work the phones under intense management supervision, according to the report. The fine is the latest in a string of troubles besetting for-profit educators this year.
In February, federal agents raided the Carmel, Ind., headquarters of ITT Educational and 10 of its campuses. The company now faces a probe by the Department of Justice for possible falsification of student grades and attendance, enrollment and post-graduate placement data. The Securities and Exchange Commission and the California attorney general also are investigating.
Rene Champagne, ITT Educational's chief executive officer, said Tuesday at an investment conference in New York that the company continues to cooperate with the Department of Justice investigation. Similar allegations have put Career Education Corp. Under investigation by the Department of Justice and the SEC.in June, the Department of Education cited a school operated by Corinthian Colleges Inc. For violating student loan application rules.
Government investigations are particularly threatening to for-profit educators because they receive 60 percent to 70 percent of their tuition revenue from government financial aid. The Apollo Group, the publicly traded parent company of the University of Phoenix, had announced last week that it agreed to pay $9.8 million to settle a year-old inquiry by the Department of Education. It did not admit any wrongdoing.
Todd Nelson, Apollo Group chairman and chief executive officer, called the regulators' criticism of the university's recruiting practices "very, very unfair" and inaccurate.
"That's not how we do it, " he said.
The University of Phoenix offers bachelor's, master's and doctoral degrees, focusing on business and management, for working professionals. It has 151 campuses in 30 U.S. States, Puerto Rico and Canada, according to its Web site. As of May, it had 213,000 students, including nearly 110,000 attending its online campus, the site said.
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