Roundup: Week of January 14 – January 18

University of Phoenix Found Guilty of Securities Fraud, Must Pay $280 Million

A federal jury handed shareholders a major victory on Wednesday over the University of Phoenix, the largest for-profit university in the country. After only two days of deliberations, the jury found that the Apollo Group, the university’s parent company, was guilty of securities fraud for withholding crucial information from investors and ordered it to pay approximately $280-million to the shareholders who had sued. In 2004, the company repeatedly failed to disclose in its Security and Exchange Commission filings and in its conference calls with financial analysts the existence of a U.S. Department of Education review that had blasted its student recruiting practices. That report, which found that the university had violated a federal law that bans colleges from compensating admissions officers on the basis of enrollments, became public only after the university reluctantly agreed to a $9.8-million settlement with the Department in which it denied any wrongdoing. The report’s findings are also at the center of a separate False Claims Act lawsuit that has been brought against the university by two former admissions officers.

Elite Football Players Spend 45 Hours a Week on Sport, Study Finds

Between their sport and their studies, high-level college football players are working essentially two full-time jobs, according to a study released this week by the NCAA. The study found that student-athletes in the Football Bowl Subdivision, previously known as Division I-A, spent an average of 44.8 hours a week on their sport. While NCAA rules limit coaches to taking up 20 hours a week, players reported spending significant amounts of time watching game film, lifting weights, or engaging in other activities for their sport. In addition, players reported spending roughly 40 hours a week on academics, meaning that over 50 percent of their week was filled with either sports or coursework. Other sports, such as men’s golf and baseball, also exceeded the 40 hour mark, while women’s basketball and softball reported spending over 35 hours weekly. Not surprisingly, a majority of the athletes from those men’s sports indicated that they felt more like athletes than students. NCAA President Myles Brand both decried and defended the trend, noting “once you get past 40 hours, you’re really pushing it,” but also saying that students studying music would be more likely to refer to themselves as musicians first.

College Endowments Earned Average Return of 16.9% in 2007

We’ve already reported on the strong endowment gains posted last year by Yale, Harvard and Stanford universities, but colleges overall earned a healthy 16.9 percent average return on their invested funds for the 2007 fiscal year, according to a survey released this week. A driving factor behind the solid growth, the highest average return in eight years, was international stocks, which earned a 28.3 percent return. The growth was most pronounced among the wealthiest schools, as institutions with $1 billion or more in their endowments earned a 21 percent return compared with 19.4 percent for endowments between $500 million and $1 billion. More troubling, however, is that the survey found that institutions spent only 4.4 percent of endowment assets on average, well below the 5 percent spending mark advocated for by Higher Ed Watch.

Ed Dept. Begins Holding Hearings on Regulations for Subsidy Cuts

Just as it did last week with TEACH Grants, the Department of Education began holding meetings this week to set the regulations governing the lender subsidy cuts and aid expansion passed by Congress last September. Among the biggest concerns addressed by the department was how to prevent for-profit loan companies from receiving benefits intended for non-profit lenders. The panel also addressed the question of whether the new regulations should pre-empt existing state laws governing college-lender interactions — a position supported by student-loan industry and some college lobbyists but opposed by Higher Ed Watch and other advocates for students.