Education.  In their opinion the gainful employment rule is expected to be excluded from next

week’s education proposal.   The article outlines that the Office of Management and Budget

included a note in the Federal Register concluding that the DOE’s proposed program integrity

rules could have a major economic impact, a designation that would require the DOE to

strengthen the evidence necessary to justify the need for the regulation.  Furthermore, the article mentions

that the designation is believed to be a major reason why the DOE has (according to reports

from several sources Thursday, though unconfirmed by department officials directly) decided

to omit the gainful employment proposal from the proposed regulations expected to be

released next week.  This if the outcome follows the assumption will bring smiles to many of the faces I saw at last

weeks CCA.  Lets hope!

The pre-market announcement apparently is due to

 1) higher than expected bad debt expense,

 2) greater than expected investments in BP Holdings, the European education company that Apollo recently acquired.

Expected bad debt expense surged well above estimates as a % of revenue of 6.8-7.1%(a ~280 bps increase YoY) is higher than our estimate of 4.7% (a ~60 bps increase YoY). The lower than expected Q2 EPS also reflects a loss per share from BPP Holdings. Apollo has authorized a $500M incrase in the share repurchase program. The size of the share repurchase authorization program is now close to $800M.

The company will hold its 2Q10 conference call on March 29.

About the Litigation Under the False Claims Act, plaintiffs – or relators – sue as “partial assignees” of the government’s claims for alleged injuries to the government. The False Claims Act lawsuit against University of Phoenix was filed by two private plaintiffs in March 2003 in United States District Court for the Eastern District of California, Sacramento Division. The suit alleged University of Phoenix violated a federal statute and regulation stating that while recruiters may be compensated based in part on the number of students they enroll, it cannot be the sole factor for determining their compensation. After review of the lawsuit’s allegations and consultation with the U.S. Department of Education, the U.S. Department of Justice declined to join in the litigation. In fact, in a brief submitted to the Ninth Circuit in connection with the case, the Justice Department expressed “the government’s strong support for the important work of proprietary institutions of higher education, like University of Phoenix, that are providing much-needed educational opportunities to people looking to advance their careers and to earn a better living for themselves and their families.” In September 2003, the plaintiffs filed a First Amended Complaint, followed by a Second Amended Complaint in March 2004. The Court twice dismissed this case, ultimately with prejudice, before it was reinstated by the Ninth Circuit Court of Appeals in September 2006. About Apollo Group, Inc.

Apollo Group, Inc. is one of the world’s largest private education providers and has been in the education business for more than 35 years. The Company offers innovative and distinctive educational programs and services both online and on-campus at the high school, undergraduate, graduate and doctoral levels through its subsidiaries: University of Phoenix; Institute for Professional Development; College for Financial Planning; Western International University; Meritus University; Insight Schools and Apollo Global. The Company’s programs and services are provided in 40 states and the District of Columbia; Puerto Rico; Canada; Latin America; and Europe, as well as online throughout the world (data as of August 31, 2009).

For more information about Apollo Group and its subsidiaries, call 800-990-APOL or visit the Company’s website at www.apollogrp.edu . Forward-Looking Statement Statements in this press release that are not statement of historical fact are forward-looking statements, and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors. For a discussion of the various factors that may cause actual results to differ materially from those projected, please refer to the risk factors and other disclosures contained in Apollo Group’s previously filed Forms 10-K, Forms 10-Q and other filings with the Securities and Exchange Commission.

Source: Apollo Group, Inc.

Apollo Group, Inc. Investor Relations Contacts: Allyson Pooley, 312-660-2025 allyson.pooley@apollogrp.edu  Jeremy Davis, 312-660-2071 jeremy.davis@apollogrp.edu  Media Contact: Sara Jones, 818-326-1871 sara.jones@apollogrp.edu

 A cover story (http://online.barrons.com/article/SB125755384448934953.html#articleTabs_panel_article%3D1%26articleTabs%3Darticle) this week in Barron’s takes aim at for-profit colleges and universities, saying student graduation rates and default rates are worse than those at traditional colleges, and that student dropout rates are as high as those at public universities.

 ”For-profit schools like to blame dropouts and defaults on the population of poor and minorities the industry ‘serves,’” concludes Bill Alpert, the article’s author. “But the evidence doesn’t show whether the industry’s serving that population or preying on it.”

In a two-page critique released Monday, Ariel Sokol, a New York City-based analyst with Wedbush Securities, picks apart the article, describing it as sensationalized and saying the author’s analysis is flawed.

 In particular, Sokol says Alpert uses U.S. Department of Education data on drop-out rates and graduation rates for full-time, first-time students pursuing bachelor’s degrees. Yet for profit institutions serve primarily working adults who are rarely first-time students, observes Sokol.  Therefore the department data that Alpert relies on “represents a fraction of the total enrolled students,” at for-profit institutions says Sokol.

 He also says that because for-profit institutions typically have open admissions policies they are likely to have lower student retention rates. Additionally, he writes, pursing a degree as an adult is harder than as an 18-24-year old, leading to higher drop-out rates.

—-Andrea L. Foster

click here to register: http://www.bmocm.com/conferences/2009backtoschool/default.aspx