Apollo Group Provides Update on Current Events

Business Wire, Feb 21, 2008

* Private loans remain at approximately 4% of revenue

* Current available liquidity approximately $1 billion and current exposure to auction rate securities is $107 million

* $95 million bond posted and court stays judgment while post-trial motions are pending in securities litigation

* Update on sale-leaseback of Phoenix headquarters buildings

PHOENIX -- In recognition of significant uncertainty in the capital markets, Apollo Group, Inc. (Nasdaq:APOL) ("Apollo Group" or "the Company") today provided an update on several issues which could potentially impact the Company's liquidity and business. The Company is providing this information today; however, the Company may not provide this level of detail or provide further updates in the future except as it deems necessary.

"In light of the recent scrutiny of the student loan industry and current events in our business, we would like to assure investors of our financial stability, and to affirm that our students are not experiencing any interruptions in receiving the federal funding needed to support their education," said Joseph L. D'Amico, Apollo Group's Executive Vice President and Chief Financial Officer.

Mr. D'Amico added, "We continue to generate positive cash flow, have a very sound balance sheet and have available approximately $1 billion of liquidity. We believe this liquidity level will more than meet our business needs during this time of uncertainty in the capital markets."

Federal Family Education Loan Program ("FFELP") and Private Student Loans

Apollo Group has not experienced any interruption of Title IV student loan funding, which includes FFELP loans guaranteed by the government. In addition, the Company plans to add a fifth lender in the near future to its preferred lender list to provide students seeking loans with an even broader list of lender choices. The additional lender will offer FFELP loans directly and private loans through a third-party relationship.

As previously announced, tuition payments funded from third-party private loans continue to represent approximately four percent of the Company's revenue. Third-party private loans are generally utilized by students in the University of Phoenix's bachelor degree programs. The fastest growing sector of the Company's student body, University of Phoenix's associate degree students, do not require private loans to cover the cost of their program as the tuition levels are below Title IV loan limits.

Although the Company has seen some tightening of underwriting for students seeking private loans (measured as a percentage of applications approved relative to those submitted to a lender), students generally have had more than one choice of lenders and therefore, this tightening, to date, has not had a significant adverse impact on students in the Company's programs. As previously disclosed, the Company does not have recourse exposure on private student loans, with one exception of a minor private loan relationship. The total exposure on this loan program is less than $1 million.

Private loans have become more difficult to obtain for international students enrolled at the University of Phoenix. As such, some lenders have tightened their credit criteria or canceled their international programs. The Company is seeking alternative lenders to provide private loans to international students and may be required to pay an up-front amount of up to 10% of each loan to secure available financing for these students, which is consistent with certain previous programs for international students.

Auction Rate Securities ("ARS") and Liquidity Position

Recently, there have been reports about failed auctions in the auction rate securities market, and speculation with regard to the effect the failures may have on the liquidity of investors who hold these securities, such as Apollo Group. During the second quarter of fiscal 2008, the Company owned as much as $365 million in ARS - all in high quality (A rated and above) municipal securities, preferred stock and other tax-exempt bonds. As of February 19, 2008, all but $107 million of the ARS investments had been liquidated and not reinvested in the ARS market as the Company intentionally reduced its exposure to these instruments. Of the $107 million, approximately $79 million in ARS instruments were not liquidated due to failed auctions. Despite these failed auctions, there have been no defaults on the underlying securities, and investment income on these ARS holdings continues to be received in a timely manner. As a result, the interest rates on these failed ARS investments were reset and now have a weighted average tax-exempt interest rate of 5.2% compared to 4.5% prior to the failed auctions.

For the immediate future, the Company will maintain a more conservative investment portfolio given the uncertainties in the credit markets and expects investment income to reflect the conservative nature of these investments. As of February 19, 2008, the Company had approximately $1 billion in liquidity composed of approximately $500 million of cash, cash equivalents and marketable securities (excluding student-related restricted cash and after posting the bond as discussed below), and a $500 million line of credit, which it has not drawn upon since its inception.