The University of Phoenix one of the nation’s largest for-profit colleges will pay a record $191 million settlement to resolve charges stemming from a five-year investigation by the Federal Trade Commission. On Dec. 10, Andrew Smith, Director of FTC’s Bureau of Consumer Protection noted it was the largest settlement the Commission has obtained in a case against a for-profit school.
“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist,” stated Smith.
Among the multiple charges filed against UOP were deceptive lead generation, false claims of affiliation with government or major employers, misrepresentations about credit transfers and a lack of proof for the job and earnings touted by the university.
UOP’s “Let’s Get to Work” marketing campaign claimed nearly 2,000 corporate partnerships that did not exist. Firms such as Staples, Microsoft, Red Cross and Twitter were falsely represented as partners that would fast track employment opportunities for Phoenix students.
PAYBACK
According to FTC, former students who were enrolled from October 2012 through December 2016 may be eligible for $50 million in restitution, and an additional cancellation of $141 million owed in unpaid tuition balances. This settlement does not address federal loans borrowed during this time period. Apollo Education Group, UOP’s parent company, was given 15 days from the settlement date to advise former students who are covered by the agreement. Additionally, Apollo and Phoenix must alert credit reporting agencies within 55 business days to remove related debts from the affected students’ credit report.
“While Education Secretary Betsy DeVos continues to make it easier for predatory education companies to recruit and rip off students, the FTC has proven that they have the backs of the borrowers and their families,” added Whitney Barkley-Denney, a senior policy counsel with the Center for Responsible Lending (CRL). “The students defrauded by the University of Phoenix deserve nothing less than full loan forgiveness from the Department.”
On the same day as FTC’s record enforcement action, Secretary DeVos announced a new plan to limit loan forgiveness to only partial amounts determined by a formula, a different and debatable approach to the Department’s Borrower Defense to Repayment rule (BD) adopted under the Obama Administration.
By its own admission, the Department conceded that as of November 12 this year it had received over 290,000 borrower defense applications, and further that more than 225,000 or 77% remained pending. Even so, the Department’s official policy statement on the change states, “successful BD applicants whose program earnings were less than the median could be awarded 25, 50, 75 or 100% relief, depending upon where their program median earnings fall in the range.”