BANGALORE (Reuters) - Apollo Group Inc APOL.O, parent of University of Phoenix, said it received a report from the U.S. Department of Education related to the untimely return of federal student loans, sending its shares down more than 5 percent.
The report, received on December 31, 2009, follows the Department of Education’s review early last year of University of Phoenix’s policies and procedures involving Title IV programs.
The company said the report had issues regarding the timing of the return of Title IV funds but did not indicate any errors in the calculation of the amount that had to be returned.
According to DoE’s regulations, education institutions have to return unused Title IV funds within a stipulated time frame if a student drops out of a program.
The company said if University of Phoenix is not granted relief from this requirement, it would be required to post a letter of credit of about $125 million by January 30.
Apollo added that it will talk to the DoE regarding these regulations.
In Nov 2009, the University of Phoenix was recertified for participation in federal student financial aid programs under Title IV of the Higher Education Act for three years.
Apollo, which has been plagued by regulatory concerns over the past several months, believes its liability resulting from the findings will be about $1.5 million.
The company also posted first-quarter earnings of $1.47 a share, excluding items, that topped analysts’ expectations by a cent.
The company said its results were driven by an 18.4 percent growth in enrollments at the University of Phoenix.
Shares of the company fell nearly 6 percent to $60.31 Thursday in trading after the bell.
Editing by Saumyadeb Chakrabarty