Holding for-profit colleges accountable for poor student outcomes and abusive practices has been a cornerstone of the Obama administration’s higher education policy. Phoenix, like other for-profit schools, has been battered by government investigations, heightened federal regulation and poor enrollment.

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Against that backdrop, education officials sent the presidents of Phoenix and Western a laundry list of demands that must be met by the new owners for the schools to remain in the federal student aid program. Chief among them is a request that investors provide a letter of credit from a bank assuring the availability of as much as $385 million, roughly 25 percent of the federal loans and grants the schools receive. The letter is meant to protect students and taxpayers if the school is unable to cover federal student-aid liabilities.

What’s more, the schools will not be allowed to add any new educational programs. They also must cap enrollment levels, submit projected cash flow statements, produce monthly student rosters, alert the department to any investigations and commit to a recruitment standard, among other things. Many of the requests would essentially place the same demands on the soon-to-be private company as a publicly traded outfit.

“If investors were betting that the Education Department would rubber-stamp this deal, they bet wrong,” said Rohit Chopra, a former regulator at the Consumer Financial Protection Bureau. “Given that the new owners have no experience operating universities, the Education Department wants to make sure they aren’t being taken for a ride.”

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In the letter obtained by The Washington Post, Michael Frola, a senior official at the Education Department, indeed raised concerns about the buyers’ thin education resume, with no experience running or even investing in colleges. He also said the declining enrollment at both schools is a factor that will affect their financial viability on an ongoing basis.

“The conditions set forth are designed to ameliorate operational and administrative capability risk,” Frola wrote. “The institutions have been, or are, subject to a variety of investigations by states, other agencies of the federal government. These investigations suggest heightened administrative and operational weaknesses.”

Apollo officials said the company is evaluating the letter.

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The investment group could bow out of the deal because of the hefty letter of credit. A provision in the sale terms says the buyer can walk away if they are required to pony up a letter equal to more than 10 percent of the federal financial aid Phoenix and Western receives, said Trace Urdan, a research analyst at Credit Suisse. But he suspects the buyers will move forward with the acquisition, especially since Apollo’s shares jumped after the election of Donald Trump.

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“The buyers got a nice little gift. They made a bid for a stock in one regulatory environment and they are able to collect in a different one,” he said. “The 25 percent letter of credit just increases the cost, that doesn’t kill the deal. You get a new administration, a new education secretary and maybe all of these restrictions can be revisited.”

It’s been 10 months since Apollo first announced that a group of investors, including funds affiliated with Apollo Group Management and Najafi Cos., were offering $9.50 a share in cash for the outstanding shares of the company. The group upped the acquisition price to $10 per share in May, which represents a 52 percent premium over Apollo’s closing price on Jan. 8, when the board of directors said it would considering its options.

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The deal has been blessed by Apollo’s board and shareholders. It must also get a thumbs-up from the Higher Learning Commission, an accreditation group that is mulling over the department’s conditions and waiting for Apollo to provide updated enrollment and financial statements, according to spokesperson Steve Kauffman. Once the transaction is completed, Miller, chief operating officer of Vistria, will become chairman of the Apollo board. He served as deputy secretary at the Department of Education from 2009 to 2013.

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Analysts are mixed on whether the sale is a lifeline for the company and the more than 175,000 students it educates. Profits at Apollo have tumbled over the last few years, with the company posting an operating loss of $65 million in the fiscal year ending Aug. 31, compared with operating income of $114 million the previous year. Enrollment at the flagship University of Phoenix during that time fell from 214,500 to 165,600.

Yet Urdan said the company is not in as bad a shape as ITT Educational Service was before the company closed earlier this year. Apollo is still generating positive cash flow and is still healthy enough to survive without the acquisition, he said.

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“I don’t think Apollo needs this deal to survive. They need to figure out their business, but that isn’t impacted one way or the other by them being bought,” Urdan said. “Given what’s going on with the stock, if deal fell apart … you might actually see the price go up.”

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Apollo, based in Phoenix, runs schools that provide undergraduate, graduate and career training throughout the United States, Asia, Africa, Australia, Europe and Latin America. The company got its start in 1973 and has since grown the University of Phoenix into a household name.

But the university has been at the center of several state and federal investigations into its recruitment and marketing practices. Late last year, the Defense Department suspended the school from recruiting on military bases and accessing federal education funding for allegedly violating an executive order preventing for-profit colleges from gaining preferential access to the military.

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The DOD lifted the ban but said it would continue to monitor the school, the largest recipient of federal student aid for veterans, taking in nearly $1.2 billion in G.I. Bill benefits since 2009. Phoenix is still under investigation by the Federal Trade Commission for deceptive advertising and marketing. The regulator requested information about the school’s military recruitment, enrollment and student retention, among other things.