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Apollo Education Group, the company that owns the University of Phoenix, is considering selling itself after years of declining revenue and enrollment. - 

The private equity firm Apollo Global Management is in talks to buy the parent company of the University of Phoenix, according to news reports Tuesday. Apollo Education Group (no relation – yet) announced Monday it’s considering selling itself. The deal, according to the Wall Street Journal, could be worth around $1 billion.

Like most for-profit colleges, Phoenix has been struggling with falling enrollment and increased regulation. At its peak six years ago, the university enrolled almost 500,000 students. Last quarter there were about 177,000.

“The biggest issue is that the for-profit companies grew so fast for so long, they frankly got fat and happy,” said analyst Peter Appert with Piper Jaffray.

For-profit colleges have attracted scrutiny from regulators for aggressively recruiting students, many of whom didn’t graduate or couldn’t get jobs that paid enough to manage their loans. The University of Phoenix has been suspended from recruiting on military bases and receiving tuition assistance funding from the Department of Defense.

“The net result is the companies have had to remake themselves,” Appert said.

The University of Phoenix has closed campuses, cut degree programs and plans to be more selective in admitting students. A sale to a private equity firm would give Apollo more time to turn around, said Ben Miller, an education policy analyst with the Center for American Progress.

“When Phoenix is reporting every quarter that it’s got thousands fewer students, investors are just hammering the price,” he said. “If it can go private it gets some breathing room.”

A spokesman with Apollo Global Management had no comment Tuesday. Apollo Education Group also declined to comment.

Apollo Education is still fairly attractive, said Appert. As a mostly online college, it’s not that expensive to run, he said. The company is also growing overseas, where regulations are looser.

“The fact that you’ve got a big market with potentially some growth associated with it, with high returns on capital, and very good free cash flow characteristics, at least historically, would definitely attract the attention of private equity buyers,” Appert said.

College turnarounds have been tried before. A competitor called Education Management Corporation was taken private in 2006, only to struggle when it reemerged as a public company a few years later.

“It may well be that this sale only staves off further problems down the road and doesn’t actually fix the underlying issues that are facing the company,” said Miller.

Follow Amy Scott at @amyreports