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147,000 University of Phoenix students are being sent direct payments in deceptive advertising settlement

7
Aarthi Swaminathan
·Reporter
·3 min read

The Federal Trade Commission (FTC) is sending checks totaling nearly $50 million to 147,000 former students of the University of Phoenix as part of a settlement over the school's use of deceptive ads.

The lawsuit against the for-profit school and its parent company Apollo Education Group was settled in December 2019 with the FTC for $191 million and alleged the university used deceptive ads that "falsely touted its relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and the American Red Cross."

The FTC also said that the University of Phoenix provided false impressions that the schools worked with these companies to create jobs for its students and tailored curriculum for such jobs.

“The FTC made allegations concerning a campaign that ended in 2014 that were not tested through litigation, and do not constitute factual findings by either the FTC or any court," a University of Phoenix spokesperson stated to Yahoo Finance. "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.”

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The settlement had required the university to cancel $141 million in debts owed to the school by students who were harmed by the fake ads, and $50 million in cash. That money, the FTC announced on Wednesday, will be distributed in the coming days.

(FTC)
(FTC)

The FTC is mailing 146,804 checks and 677 PayPal payments for students who were enrolled in a master's, bachelor's, or associate's degree program at the University of Phoenix between October 15, 2012 and December 31, 2016, students who had paid more than $5,000 in cash, grants, federal and private student loans or military benefits, students who did not get debt cancellation as part of the settlement, and students who did not opt out of the University of Phoenix providing the student's contact information to the FTC.

"This is the largest settlement the Commission has obtained in a case against a for-profit school,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in 2019. “Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist."

This isn't the only recent settlement between a regulator and a large for-profit school: In September 2020, the Consumer Financial Protection Bureau (CFPB) settled with the now-defunct for-profit chain ITT Technical Institute over its predatory lending practices.

There has been a boom in graduate enrollment at for-profit schools like Phoenix over the fall and spring semesters, according to data from the National Clearinghouse Research Center, as the coronavirus pandemic provided an opportunity for schools with slick marketing and remote capabilities.

Some predatory for-profit schools are geared toward aggressive recruiting and enrolling students fast, Yahoo Finance previously detailed, even though they leave students with heavy levels of debt.

More than 24,000 borrower defense claims have been submitted against the University of Phoenix as of December 2020, according to a freedom of information request obtained by Yahoo Finance.

This story has been updated with a statement from the University of Phoenix.

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