University of Phoenix to Cancel $141 Million in Student Debt

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The University of Phoenix announced on Tuesday that it will cancel $141 million in student debt. The for-profit school’s announcement is part of a deal that settles allegations that the university displayed false advertisements in 2012.

The University of Phoenix and its parent company, Apollo Education Group, have agreed to cancel $141 million in student debt and pay an additional $50 million in order to settle a dispute with the Federal Trade Commission (FTC) alleging that the school marketed deceptive advertisement toward its students in 2012, according to a report by Reuters.

The dispute had been over an advertisement campaign that suggested the school had partnerships with certain companies — such as Microsoft, Twitter, Yahoo!, and Adobe — and would facilitate job opportunities for students at said companies.

But when investigators looked into the matter, they found that the university did not have a partnership with the companies. The FTC said that this is the largest settlement the agency has ever obtained against a for-profit college, according to NBC News.

“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist,” said director of the FTC’s Bureau of Consumer Protection, Andrew Smith.

The University of Phoenix, however, says that it agreed to the deal “to avoid any further distraction from serving students,” and that the FTC had focused specifically on a single campaign ad that ran from late 2012 to early 2014.

“We continue to believe the university acted appropriately,” the university insisted, according to Reuters.

Rather than having an actual partnership with the school, much of the companies brought up in the dispute were instead part of the university’s “Workforce Solutions” program, which offered discounted tuition to their employees in exchange for the companies’ help promoting the school, according to NBC.

Investigators also found that some companies had raised concerns about the way they were being portrayed in University of Phoenix advertisements.

In one 2013 radio ad, for example, the university said companies such as AT&T and Adobe were “helping us shape our curriculum to make sure today’s classes help prepare you to pursue tomorrow’s jobs,” which investigators said was false.

The report added that even some higher-up officials at the university made their concerns known as well, such as a senior vice president, who referred to an advertisement using Adobe as “smoke & mirrors.”

“They are not a partner,” wrote the vice president to the chief marketing officer in 2012. “We may do business with them, but nothing academically.”

Students who enrolled between October 1, 2012 and the end of 2016 will reportedly have their student debt canceled via letters informing them that they are no longer obliged to make payments to the school.

You can follow Alana Mastrangelo on Twitter at @ARmastrangelo, and on Instagram.


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