Abstract

Last month, higher education company the Apollo Group, Inc. (Apollo) confirmed that it entered into an agreement with the United States (US) federal government to resolve a long-standing lawsuit concerning its subsidiary, the for-profit University of Phoenix (Phoenix). Originating in 2003, the False Claims Act lawsuit filed by university officials accused Apollo of illegally offering incentive compensation for the recruitment of students to Phoenix, charges denied by the company. Yet under the terms of the agreement, Apollo is agreeing to pay US$67.5 million to the US government, and an additional US$11 million in legal fees to the case plaintiffs, two former admissions officials. At the same time, the agreement releases both Apollo and Phoenix from having to “acknowledge, admit or concede any liability, wrongdoing, noncompliance or violence as a result of the settlement”. With year-old standards setting body the American International Recruitment Council having recently certified a number of independent agencies to recruit students to the US, incentive compensation as it regards recruitment is likely to garner significant attention in the coming years. What are the terms of Apollo’s legal agreement, and how is the settlement affecting the company? What controls currently regulate overseas student recruitment in the US, and is regulation likely to grow?