University of Phoenix to Forgive $141M in Student Debt in FTC Settlement

The University of Phoenix will pay $191 million to end the Federal Trade Commission’s allegations that the for-profit school falsely represented job and networking opportunities to prospective students.

The University of Phoenix settlement requires that the school pay $50 million in cash and to cancel a total of $141 million in debts owed to the school from students who decided to attend based on the misrepresentations.

NBC News notes that the University of Phoenix settlement is the largest one that the Federal Trade Commission has ever reached with a for-profit university. 

In its complaint against the University of Phoenix, the Federal Trade Commission took issue with an ad campaign called “Let’s Get To Work” that was launched in 2012 and ran through 2014.

In the campaign, the school reportedly advertised that it had valuable connections with companies like AT&T, Yahoo, Microsoft, Twitter, and the American Red Cross which could help get students jobs at these desirable organizations.

However, the FTC’s investigation discovered that these connections did not exist because the school did not have agreements with the companies. 

According to the FTC, this advertising campaign was damaging, because job opportunities and professional connections are a major factor that students use to decide what college to attend. Allegedly, some students might not have decided to attend the University of Phoenix had they known that the school did not really have these valuable opportunities and connections.

The University of Phoenix denied the claims, but agreed to settle “to avoid further distractions from serving students,” according to NBC.

Per the terms of the settlement deal, the University of Phoenix and its owner, Apollo Education Group, will cancel all remaining student debt for students who enrolled between Oct. 1, 2012 and Dec. 31, 2016. Eligible students will receive a letter stating that they are no longer in debt to the school.

The settlement also stipulates that the university must provide $50 million to compensate consumers who were allegedly misled by the ad campaign in question. In addition to monetary compensation, the for-profit institution must stop misrepresenting its relationship with potential employers and companies, says the FTC.

USA Today explains that the University of Phoenix launched the 2012 ad campaign in an effort to help the University of Phoenix differentiate itself from competitors.

The previous ad campaign for the school reportedly focused on flexibility and convenience of the school’s online course offerings. However, the school’s enrollment was allegedly falling, so the university launched the “Let’s Get to Work” campaign in an attempt to attract students. 

The FTC claimed that the university touted relationships with companies not based on real connections with the companies, but with “desired brand association” with popular and well-regarded populations in order to drive students to apply to the University of Phoenix. 

Did you see the University of Phoenix’s “Let’s Get to Work” ad campaign? Let us know what you think of the recent FTC settlement in the comment section below!

The FTC is represented in-house by Alden F. Abbott, Thomas J. Widor, Stephanie Cox, and Adam Wesolowski.

The University of Phoenix FTC Lawsuit is Federal Trade Commission v. The University of Phoenix Inc., et al., Case No. 2:19-cv-05772-ESW, in the U.S. District Court for the District of Arizona.

UPDATE: The TCA University of Phoenix investigation is now open! If you are a Texas or California resident and were misled by University of Phoenix’s representations about job prospects, and did not get a job in your field of study after graduation, submit your information here!

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