States Department of Education, Office of the Inspector General (OIG) began a compliance audit of Capella. OIG focused on the university's policies and procedures concerning the return of Title IV funds as required by Federal Law for students who failed to give official notice that they were withdrawing from the school. The OIG found that Capella made accounting mistakes in how it calculated student eligibility for government-subsidized loans, including failing to return all funds disbursed on behalf of students who dropped out before their first day of class. Capella, in a response to the audit, says it recognizes some past shortcomings in its accounting practices and has made changes to ensure that such errors are not repeated. Criticism of marketing expenses and executive compensation In 2012, Capella received criticism for its expenditures on marketing, profit, and CEO pay rather than instruction, and its use of aggressive recruiting practices. According to a report issued by former U.S. Senator Tom Harkin for the Senate Education Committee, approximately 79% of the institution's cash flow comes from US government Title IV payments, including Pell grants. The report concluded that Capella's recruiting and student services were better managed than most other for-profit competitors, especially among graduate degree students. The high withdrawal rate among Bachelor's student hopefuls, the over-reliance on part-time instructors, and the high relative marketing budget were cited as potential causes for concern. Class action lawsuit In 2018, a lawsuit was filed against Capella in the U.S. District Court for the District of Minnesota alleging that the school "violated doctoral students' rights by creating a process intended to ensure that it would be difficult, if not impossible, for students to timely complete, or complete at all, their doctoral programs." The school rejected the lawsuit's claims, stating that the court had thrown out the majority of the legal claims. Academics According to College Navigator, Capella's faculty consists of 207 full-time instructors and 1,321 part-time instructors. Undergraduate applicants who do not have any credits eligible for transfer must successfully complete a university-approved examination to be considered for admission. Capella's enrollment is composed mainly of graduate students including 47 percent MS/MBA students and 23 percent PhD/PsyD doctoral students. The undergraduate population of Capella makes up 27 percent of the student body. Less than one percent are working on certificate programs. The average age of a Capella student is 40. Ninety-five percent of students are enrolled part-time, 74