Federal Investigation and Settlement

The deceptive practices of the University of Phoenix did not go unnoticed. The Department of Education joined forces with the Federal Trade Commission (FTC) to investigate these allegations. This collaboration ultimately led to a $191 million settlement with the school in 2019. In 2021, the FTC began sending refunds to students “who may have been lured by allegedly deceptive advertisements,” as reported by the FTC.

Despite these actions, the University of Phoenix denied any wrongdoing. When the FTC began issuing refunds, the institution stated, “the University has admitted no wrongdoing and continues to believe it has acted appropriately. This settlement agreement has enabled us to continue our focus on our core mission of improving the lives of our students through career-relevant higher education, and to avoid any further distraction from serving students that could have resulted from protracted litigation.”

Borrower Defense and University of Phoenix

With regards to the borrower defense announcement, a university spokesperson told Insider that “the University of Phoenix takes student borrower complaints very seriously and has provided significant evidence to the Dept. of Ed refuting inaccurate, baseless, or incomplete claims. While the University is not against relief for borrowers who have valid claims, we intend to vigorously challenge each frivolous allegation and suspicious claim through every available legal avenue.”

The borrower defense to repayment program exists to protect the rights of students who have been misled or defrauded by educational institutions. It provides a mechanism for these students to seek relief from the loans they incurred while attending institutions that engaged in deceptive practices.

Relief for Borrowers

The recent announcement of $37 million in student loan debt relief for University of Phoenix borrowers shines a spotlight on allegations of deceptive practices by the institution. According to Federal Student Aid Chief Operating Officer Richard Cordray, “The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll. Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees.”

The Education Department revealed that the university led an advertising campaign that misrepresented its relationship with companies, suggesting that they would give preference to hiring University of Phoenix students. However, the department found that these corporate partnerships provided no such benefits to students.