University of Phoenix barred from recruiting military students

Reuters News
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Posted: Oct 09, 2015 1:50 PM

(Reuters) - For-profit college operator Apollo Education Group Inc said the U.S. Department of Defense has placed its University of Phoenix on probation, barring the unit from recruiting students on military bases or using federal money to fund tuition.

Apollo's shares fell as much as 12 percent to $10.91 on the Nasdaq on Friday.

The tuition assistance program provides educational assistance to active duty military members.

Apollo said the university's participation in the department's tuition-assistance program was placed on probation partly due to the ongoing U.S. Federal Trade Commission and California investigations.

In July, the FTC demanded information about the university's marketing and advertising techniques, which may possibly have been deceptive.

The government is considering the possibility of terminating Phoenix's involvement in the program altogether, Apollo said on Friday.

The university was also issued a subpoena by California Attorney General's office in August, seeking information on recruiting of U.S. military and California National Guard personnel, and the use of U.S. military logos and emblems in marketing.

No new or transfer students will receive tuition assistance at the university on probation, said Dawn Bilodeau, head of the DOD's department that oversees voluntary education.

Current students receiving such assistance will be able to complete their courses already in progress and take courses needed for their academic program, a process known as "teach out."

"However, other than as required to complete the 'teach-out' process for its current students, the institution will not be authorized access to DOD installations for the purposes of participating in any recruitment-type activities, including but not limited to job training, and career events and fairs," Bilodeau said in a statement.

Last financial year, 9,282 members of the U.S. military attended the university through the department's tuition assistance program, she added.

The University of Phoenix represented 87 percent of Apollo's total net revenue in 2014 and had more than 230,000 enrolled students.

Up to Thursday's close of $12.36, the company's stock had fallen about 64 percent his year, while the Dow Jones U.S. Specialized Consumer Services index fell 6.4 percent.

(Reporting by David Brunnstrom in Washington and Ankit Ajmera in Bengaluru; Editing by Maju Samuel)