By John O’Connor and Kirk Carapezza
This week the it will review how federal student aid is administered at one of the country’s largest for-profit colleges, the University of Phoenix. Owned by the publicly traded Apollo Group, the University of Phoenix enrolls over 200,000 students, rivaling the size of the nation’s largest public university system.
Between 2000 and 2010, enrollment at the nation’s for-profit colleges quadrupled, peaking at 1.7 million — . These colleges benefited from both the Internet boom and the relaxing of credit in the run-up to the financial crisis. They spent serious money on advertising and marketing, targeting working and low-income adults with convenient online programs and the promise of job opportunities, and sometimes lending them private student loans. But the sector has been plagued by repeated allegations of financial mismanagement, fraud and abuse. For-profit colleges have been the target of and probes by .
The Department of Education controls the purse strings for these institutions, because they’re highly dependent on federal student aid for revenue. to another big for-profit, Corinthian, after that college reported errors in enrollment and job placement figures and failed to comply with record requests. Unable to operate with even a temporary cash freeze, Corinthian struck a deal with the Department of Education earlier this month to sell or close all of its campuses.