For-Profit Colleges

John Sperling, who founded the Apollo Group and its University of Phoenix in 1972, will retire as executive chairman of the company's board of directors at the end of this month, Apollo announced today. His son, Peter Sperling, will take over as the board's chairman.

A federal district judge on Thursday upheld a bankruptcy court's ruling last summer that an accrediting agency had made false representations to the U.S. Education Department that helped lead to the demise of Decker College, a for-profit college that closed in 2005. The Council on Occupational Education had appealed the bankruptcy court's July 2012 decision to a federal district court in Kentucky, arguing that the bankruptcy judge had erred in concluding that the agency's officials had misled federal officials by reporting that Decker had delivered three of its programs online without the agency's approval. But Judge John G. Heyburn II's 13-page ruling said: "The bankruptcy court reasonably found COE to be dishonest when it told the department it did not approve the hybrid programs to be offered in such a manner."

British authorities have granted the for-profit College of Law university status, and the soon-to-be renamed University of Law will be the country's first for-profit university, Times Higher Education reported. The institution trains 7,000 students annually in both undergraduate and graduate programs.

Career Education Corp. on Thursday announced that it would close 23 of 90 campuses and lay off 900 employees to cope with declining revenue and enrollment. The for-profit chain has been hit hard by what a company official called "new market realities," and has seen its total and new student numbers dip by roughly 22 percent compared to last year. It also reported an operating loss of $110 million for the year through October. The company is taking the "difficult step" of downsizing as part of a plan for a strategic turnaround as a "simplified and more nimble organization," said Steven H. Lesnik, its president and CEO, in a written statement. Career Education Corp. is also facing scrutiny from its accreditors.

The U.S. Department of Education is questioning the "financial responsibility" of Corinthian Colleges based on the department's interpretation of the for-profit's estimated intangible assets, according to a corporate filing. If not resolved, the matter could lead to Corinthian losing its eligibility to participate in federal financial aid programs. The company said in a statement that it disagrees with the department's revised take on its assets. Representatives from Corinthian and the department will meet soon to discuss the issue.

Keiser University has agreed to offer thousands of former students free retraining and has pledged that its admissions counselors and marketing materials will not misrepresent offerings, under an agreement with Florida's attorney general that was announced Wednesday, The South Florida Sun-Sentinel reported. For the last two years, Florida officials have been investigating the recruiting and marketing practices of for-profit colleges. Keiser was for-profit when the investigation started but has since become a nonprofit entity. Keiser has denied any wrongdoing and the agreement does not include any admission that the university did anything wrong.

Among the pledges made by Keiser in the agreement are that it will not advertise its programs as "fully accredited," that it will not say programs have "limited availability" unless that is true, and that federal student loans will not be described as if they have no cost to students. Further, Keiser must "clearly and conspicuously disclose" that credits may not be transferable to other colleges.

In a surprise move, Grand Canyon University this week said it would not accept the gift of a 217-acre campus in Northfield, Mass., according to a corporate filing. Five weeks ago the Hobby Lobby chain of craft stores announced that it had selected the for-profit institution after a lengthy search for a Christian owner for the property. Grand Canyon said it planned to spend an estimated $150 million to develop a second, 5,000-student residential campus at the new location. The filing revealed little about the about-face, noting only that the company had determined that accepting the campus would not be in its "best interest." However, in an interview with the Religious News Service, Grand Canyon's CEO said the city of Northfield had resisted the planned campus.

Potomac College will reimburse students for courses they take from StraighterLine, an online provider that offers 42 entry-level courses, according to a StraighterLine announcement. The for-profit college will pay students for the $999 fee for up to 10 StraighterLine courses, the equivalent of a full year of college, after students transfer the courses to Potomac and then successfully complete a semester there. StraighterLine's courses are not credit-bearing, but come with a credit recommendation from the American Council on Education.

The Apollo Group on Tuesday announced that it was closing 90 of the University of Phoenix's satellite learning centers and 25 of its campuses, leaving 112 remaining locations. The closures are part of a "re-engineering initiative" that the company said will help the bottom line by 2014. About 13,000 students, or 4 percent of those pursuing degrees at Phoenix, will be affected by the shuttering of locations. But those students will continue to be served online and at alternative sites, according to the company.

The news accompanied the release of Apollo's disappointing fourth-quarter earnings, with a 10 percent decline in annual revenue and a 15 percent dip in enrollment at Phoenix. The company also announced the elimination of 800 jobs, but not faculty positions. Phoenix last week introduced a tuition freeze for current and incoming students.