GULFPORT, Miss. (AP) _ Phillips Colleges Inc. will close 10 of the 38 business schools it operates nationwide to settle a dispute with the government over student aid money, a company official said Monday.

The Department of Education had cut off $3.7 million the for-profit company was to receive for federally guaranteed student loans. The company operates schools in 17 states, with about 14,000 students.

Federal auditors accused Phillips of telling students at two campuses in Atlanta and one in Chicago how to qualify for the loans, in violation of federal regulations.

Phillips went to court, arguing that without the money it would have to close all of its schools and seek bankruptcy court protection from creditors. But U.S. District Judge Walter J. Gex last month refused the company's request for a preliminary injunction.

In an agreement reached last week, the company agreed to close the 10 schools, while the government released the $3.7 million.

``We certainly do not like to close down some colleges and disadvantage some students,'' said Rob Guillen, the company's vice provost. But, he added, ``the situation is a lot better than it could have been.''

He would not reveal the schools slated for closure but said some were selected because they had a ``long history of financial losses.''