Apollo gains on gov't loan program access OK

NEW YORK

Shares of Apollo Group Inc. jumped Monday after the for-profit education company said the Department of Education granted its University of Phoenix schools continued access to federal student loan programs -- nearly all of its revenue -- through 2012.

University of Phoenix had been participating in the federal government's Title IV student loan program on a month-to-month basis since its certification expired in June 2007.

It had applied for recertification in March 2007.

The Department of Education's recertification of Phoenix-based Apollo's unit means University of Phoenix students will have continued access to federal loans until Dec. 31, 2012.

In 2008, student loans from the Title IV program made up 86 percent of Apollo's cash revenue from its core University of Phoenix program. University of Phoenix tuition and fees account for 95 percent of Apollo's sales. Apollo expects federal aid to continue to make up close to 90 percent of University of Phoenix's revenue for the 2010 fiscal year.

According to federal law, if federal student loans make up more than 90 percent of sales at for-profit companies for two years in a row, the schools are ineligible to participate in the loan program.

Separately, Apollo in late October announced the Securities and Exchange Commission had an "informal" inquiry into Apollo's revenue recognition practices, which have to do with how the school accounts for students who drop classes and get tuition refunds. Its shares have fallen 26 percent since then.

Shares rose $4.28, or 7.9 percent, to $58.12 in morning trading Monday. Over the past 12 months, the stock has traded between $52.79 and $90.