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Capella University is a private, for-profit, specialized distance learning institution of higher learning that is accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools and headquartered in Minneapolis, Minnesota. Capella University offers bachelor's, master's and PhD degrees in business, technology, education, human services and psychology. Capella has 76 graduate and undergraduate specializations and 16 certificate programs. Nearly 45 percent of it students are PhD students. The masters degree programs in counseling are also CACREP accredited. Today, the university has more than 17,900 students from all 50 states and 56 countries.

The school is owned by the Capella Education Company (Nasdaq: CPLA), a publicly traded parent corporation.

History

What is now the Capella Education Company was founded in 1991 by Stephen Shank, former CEO of Tonka. In 1993, The Graduate School of America was founded by Shank and Dr. Harold Abel. In 1999, the company and university were renamed to their current, Capella Education Company and University. Capella has also made business arrangements and academic partnerships with numerous other schools, corporations, and the military.

Schools

Capella University is academically organized into 5 distinct schools.

• School of Education
• School of Human Services
• Harold Abel School of Psychology
• School of Business and Technology
• School of Undergraduate Studies

Controversy

All of the major news media agencies are reporting that Capella University’s Financial Aid Director, Timothy Lehmann, has been placed on leave due to an investigation commenced by the New York Attorney General’s Office on charges that Lehmann accepted kickbacks from a student loan company, Student Loan Xpress. Lehmann was doing consulting work for Student Loan Xpress at the same time he was working for Capella. According to Reuters, "Separately, Timothy Lehmann, director of financial aid at Capella University, received more than $13,000 under a consulting agreement with Student Loan Xpress."

According to an article by the Associated Press, the amount received by Capella's Timothy Lehman from Student Loan Xpress has grown to $21,000.

Capella University is currently being audited by the United States Department of Education, Office of the Inspector General (OIG) on charges that they have not returned Title IV funds, as required by Federal Law. In a prospectus filed with the Securities and Exchange Commission (refer to pages 81 & 82), and as reported by the Associated Press, Capella University has already admitted that:

"Based on its review to date, the OIG audit staff has identified several such learners for whom it believes proper returns of Title IV funds were not made. For the three year audit period, the total amount of Title IV funds that was not returned for learners that withdrew without providing official notification was approximately $500,000."

The Capella Prospectus also states:

"Based on the field auditors’ preliminary audit exceptions, which is a preliminary list of issues regarding Capella University’s compliance with Title IV rules and requirements, and our verbal communications with the OIG audit staff, we believe that the most significant potential financial exposure from the audit pertains to repayments to the Department of Education that could be required if the OIG concludes that we did not properly calculate the amount of Title IV funds required to be returned for learners that withdrew from Capella University without providing an official notification of such withdrawal and without engaging in any academic activity prior to such withdrawal."'

In a recent article published by InvestorIdeas.com entiled, Online College Is Hot, But This New IPO in the Space Merits Barely Passing Grades reports that of the roughly $70 million dollars intially raised by Capella University's stock offering, approximately $50.5 million dollars went to corporate executives and insiders who wanted to cash out.

"Instead, most of the money is being used to fund a special dividend payable in multi-million dollar dollops to top managers and directors. As pre-IPO shareholders, they are using the IPO as way to cash out -- just at a time when we as investors are being asked to believe in the company and its future.

"Chief executive Stephen Shank, for example, is getting a rich $14.2 million, according to corporate documents. (He’s due to leave next year.) Two directors -- Jon Reynolds, Jr. and Tony Christianson – are getting around $11 million each. Two others, S. Joshua Lewis and Jody Miller, get $7.5 million and $6.8 million."

The article further cautions:

"Indeed there are other signs that Capella University has been stretching to meet growth targets:

* At 33% of revenue, selling and promotional costs are much higher than the industry average of 23%. There's a hint that Capella University has been attracting, shall we say, a less committed student.

While Capella University has been trying to obtain accreditation from the American Psychological Association (APA) for many years, they recently voluntarily withdrew their application because their PsyD programs, which were created in 2003, are considered too new to be evaluated by the APA. Prior to the introduction of the PsyD program, Capella had offered a PhD in psychology. Capella's withdrawal from the accreditation process is documented on the APA website.

Scholarships

As an accredited university Capella is authorized to partake in the Federal Stafford Loan Program but the school also offers unique scholarships offered only to leaners enrolled at Capella University. These scholarships include:

League for Innovation Scholarship: A $50,000 doctoral scholarship awarded annually since 2001 to one PhD-level student

Spirit of Capella Scholarships For Injured Service Members: Five $10,000 scholarships awarded annually to service members wounded in Operation Enduring Freedom or Operation Iraqi Freedom.

Phi Theta Kappa International Honorary Society Scholarships: Two $5000 awards given to members of PTK. The awards are divided equally over eight quarters with each learner being given $625 per quarter to help cover tuition.

The Robert C. Ford Human Services Scholarship: Awarded annually to learners enrolled in the School of Human Services

The Helene Krivosha Scholarship: Two $5,000 scholarships are awarded annually to students enrolled in the School of Education. One at the master's degree level and one at the doctoral degree level.

External links

• Capella University website
• Capella Education Company website
• Capella Education Shares Jump After IPO - Article with information about the audit of Capella University by United States Department of Education, Office of the Inspector General
• Capella University Prospectus filed with Securities & Exchange Commission. Refer to pages 81 & 82 for information regarding audit by USDE, Office of the Inspector General
• Online College Is Hot, But This New IPO in the Space Merits Barely Passing Grades
• Capella University Costs
• KARE asks: How credible is an online degree?

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