A $191 million settlement between the Federal Trade Commission and the University of Phoenix, one of the nation’s largest for-profit college chains, will accrue primarily to students who enrolled in the school between 2012 and 2016.
The suit, which was brought four years ago, is the largest brought by the FTC against a for-profit university. (The FTC has also successfully sued DeVry Education Group and the Career Education Corporation) for making false claims in their recruitment of students. Students will have $141 million in debt to the school cancelled. NPQ has written often about for-profit universities that prey on students through unfair practices like false advertising, among many others. Indeed, it’s from that act that the settlement flows.
The school, which has admitted no wrongdoing, apparently invoked the names of A-List companies as attractors. The FTC’s complaint filed in federal court yesterday described the advertising campaign.
Defendants released a new advertising campaign in late summer 2012.…Titled “Let’s Get to Work,” the campaign featured numerous high-profile corporate employers, such as Microsoft, Twitter, Adobe, and Yahoo!. The five overarching goal of the campaign has been to convince consumers that UOP students experience career success because of UOP. Specifically, Defendants have represented that UOP has worked with companies to create career or employment opportunities for UOP students and that UOP has worked with companies, such as Adobe, Microsoft, and Twitter, to develop curriculum oriented to the companies’ job needs. In reality, these companies were not working with UOP or Apollo to create job options for UOP students or to develop curriculum. Instead, Defendants selected companies to feature in their advertisements based on desired brand association. The strategy was to focus on “large, stable, technology-based, forward-focused companies with great reputations” because these companies drove the highest level of prospective student interest.
The complaint details complicity at every level of the school’s administration. There were also deceptive claims in ads targeted at military veterans, claims that implied more employment potential than the school legitimately offered. At the time they ran the ads, the company was seeing its enrollment plummet from a high of 460,000 to a mere 97,000 today. It was bought a year after the ad campaigns ended by a private equity firm.
NPR reports that “court documents establishing the settlement give the University of Phoenix and its parent company, Apollo Education Group, 15 business days to send an email and letter to eligible students, informing them that they’re covered by the agreement.”
The letter’s second paragraph reads: “You no longer owe any money to University of Phoenix. You don’t have to do anything to get this relief. Your account balance will be cleared within 45 business days.”
The letter also states that the school has 55 business days to tell credit reporting agencies to delete the debt from students’ credit reports.
So much for loans owed directly to the University of Phoenix, but many of the students defrauded by the school also have federal or private loans, and for that, students must apply for debt relief through the Education Department’s borrower defense to repayment program. Education Secretary Betsy DeVos has effectively stopped making any payments under that program, which now has 210,00 applications on file and not acted upon. Around 3,000 of those 210,000 are from former students at the University of Phoenix, according to the Student Borrower Protection Center.
NPQ has often posited that there are some “markets” in which nonprofits clearly better serve the public interest. Where there was movement under the Obama administration to try to tightly regulate some of the industry’s abuses against low-income students, the Trump administration has pulled back on much of that work.—Ruth McCambridge