January 24, 2017
The Higher Learning Commission, a college accreditation agency, has
cleared the way for the $1.1 billion sale of Apollo Education Group,
owner of the University of Phoenix, Western International University and
College for Financial Planning, to a group of investors.
commission notified Apollo on Monday that it voted in favor of an
application filed by the for-profit colleges to ensure they remain
accredited after investors assume control of the parent company,
according to a regulatory filing. All three institutions must submit
quarterly reports to the commission detailing such things as enrollment,
quarterly financials and student retention rates.
“With the receipt of this approval, we have obtained all educational regulatory approvals required,” Apollo said in the regulatory filing. The company anticipates completing the deal in February, subject to satisfying all other closing conditions.
purchase of one of the largest for-profit education companies has been
met with criticism because of the involvement of Vistria Group, a
private equity firm run by former president Barack Obama’s friend Marty
Nesbitt and former deputy education secretary Tony Miller. Vistria is
among a consortium of investors bidding to take the publicly traded
Apollo private, but its ties to the Obama administration sparked
controversy over the Education Department’s objectivity in approving the
Obama administration made holding for-profit colleges accountable for
poor student outcomes and abusive practices a cornerstone of its higher
education policy. Phoenix, like other for-profit schools, has been
battered by government investigations, heightened federal regulation and
In December, the Education Department sent the
presidents of Phoenix and Western a litany of conditions that must be
met by the new owners for the schools to remain in the federal student
aid program. Chief among them is a request that investors provide a
letter of credit from a bank assuring the availability of as much as
$385 million, roughly 25 percent of the federal loans and grants the
schools receive. The letter is meant to protect students and taxpayers
if the school is unable to cover federal student-aid liabilities.
officials also said the schools will not be allowed to add any new
programs, must cap enrollment levels, submit projected cash flow
statements, produce monthly student rosters, alert the department to any
investigations and commit to a recruitment standard, among other
things. Many of the requests would essentially place the same demands on
the soon-to-be private company as a publicly traded outfit.
In a statement,
the Higher Learning Commission said its board approved the application
with the conditions imposed by the Education Department in mind. The
commission is also requiring each school to host a peer review visit
within six months of the transaction closing.
Almost a year has
passed since Apollo first announced that a group of investors, including
funds affiliated with Apollo Group Management and Najafi Cos., were
offering $9.50 a share in cash for the outstanding shares of the
company. The group upped the acquisition price to $10 per share in May,
which represents a 52 percent premium over Apollo’s closing price on
Jan. 8, 2016, when the board of directors said it was considering its
The deal has been blessed by Apollo’s board and
shareholders. Once the transaction is completed, Miller, chief operating
officer of Vistria, will become chairman of the Apollo board. He served
as deputy secretary at the Department of Education from 2009 to 2013.
Direct link to article: https://www.washingtonpost.com/news/grade-point/wp/2017/01/24/university-of-phoenix-sale-clears-a-crucial-hurdle/?utm_term=.97df5802ff0f