Lana Oconnell
The University of Phoenix, a for-profit college, has been under scrutiny for its deceptive advertising practices and misleading recruitment strategies. In 2023, the U.S. Department of Education announced that certain federal student loans taken out by attendees of the University of Phoenix between September 21, 2012, and December 31, 2014, would be discharged. This decision was based on an investigation that revealed the university falsely advertised partnerships with prominent companies, implying enhanced job prospects for its students. As a result, approximately $37 million in loans are expected to be forgiven, impacting over 1,200 students. To be eligible for loan forgiveness, affected students must file a borrower defense application, providing relevant paperwork. This development aligns with the White House's goal of holding underperforming and deceptive institutions accountable, particularly for-profit entities. While the University of Phoenix intends to contest the loan discharges, the move has sparked discussions about the university's conversion into a nonprofit institution.
| Characteristics | Values |
|---|---|
| Eligibility | Students who attended the University of Phoenix between September 21, 2012, and December 31, 2014 |
| Criteria | Students must have been deceived by the school's claims and submit a valid application for relief through the Borrower Defense program |
| Amount | Up to $37 million in loans forgiven |
| Number of Students Eligible | Approximately 1,200 |
| Reason | University of Phoenix falsely advertised partnerships with prominent companies, implying enhanced job opportunities |
| Application Process | File a borrower defense application at Studentaid.gov; check application status at "Manage My Application" |
| Notification | Approved applicants will be notified via email by early October |
| Payment Status | Loans remain in forbearance/stopped collections, with monthly payments scheduled to resume in October |
| Other Options | Job status, disability, school closure, or other circumstances may qualify for loan forgiveness |
| Bankruptcy | Generally, student loans are not dischargeable in bankruptcy |
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What You'll Learn
University of Phoenix student loan discharge eligibility
The University of Phoenix is a for-profit college that has been accused of false advertising and deceptive recruitment practices. In 2019, the university was fined $191 million to settle claims regarding these practices. As a result, the US Department of Education announced that some federal student loans provided to attendees at the University of Phoenix will be discharged.
Eligibility Criteria:
To be eligible for loan discharge, the following criteria must be met:
- You must have attended the University of Phoenix between 21 September 2012 and 31 December 2014.
- You must have been deceived by the school's claims.
- You must submit a valid application for relief through the Department of Education's Borrower Defense program.
The Borrower Defense program is a federal program that provides a pathway for students to seek relief from federal student loan debt if they believe they have been defrauded by their college or loan provider. The program allows students to apply for loan discharge and, in some cases, receive a refund of their loan payments.
Application Process:
To apply for loan discharge under the Borrower Defense program, individuals must file a borrower defense application. The application process typically involves providing supporting documentation and evidence to demonstrate that the school engaged in deceptive or fraudulent practices. The Studentaid.gov website offers instructions and guidance on how to file a strong borrower defense application, including details on the required paperwork.
It is important to note that the University of Phoenix intends to fight loan discharges, and there may be further developments in this ongoing situation.
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Borrower defense application process
The US Department of Education has announced that some federal student loans provided to attendees at the University of Phoenix will be discharged. This ruling applies to students who enrolled between 21 September 2012 and 31 December 2014. The decision comes in the wake of an investigation into the for-profit university's improper student recruitment advertisements.
If you are a former student of the University of Phoenix and took out federal loans to attend the university between 2012 and 2014, you may be eligible for loan forgiveness. To be considered for student loan forgiveness, you must file a Borrower Defense application. This application process is designed to let the Department of Education know that you believe you have been cheated, lied to, or misled by your school, and that you are eligible to have your federal student loans canceled.
- Visit the official website of the Department of Education for detailed instructions on how to apply and the paperwork you need to provide. Studentaid.gov also offers guidance on how to file a strong application.
- Anyone with federal student loans who feels they were defrauded can apply.
- You can apply in two ways: online or by mail. If you are applying by mail, send your application to the U.S. Department of Education – Borrower Defense to Repayment, P.O. Box 1854.
- Include any supporting documents or paperwork with your application. However, note that this is not mandatory.
- Submitting a Borrower Defense application is free of charge, and you should always apply directly to the Department of Education.
- If you need help filling out the application, you can refer to the Department of Education's official guide and requirements. You can also seek additional guidance from the New York Legal Aid Group's guide.
- If you are unsure if you already have a pending application or want to check the status of your application, you can call the Department of Education's borrower defense hotline at 855-279-6207 (open from 8 am to 8 pm ET, Monday through Friday).
- If your application is approved, you will be notified via email.
Please note that the University of Phoenix intends to fight loan discharges, and there is uncertainty about the outcome of pending applications.
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University of Phoenix's deceptive practices
The University of Phoenix has been accused of deceptive practices in its marketing and recruitment of students. In 2023, the US Department of Education announced that it would forgive around $37 million in federal loans for over 1200 students who attended the university between September 2012 and December 2014. This decision was based on the Federal Trade Commission's (FTC) findings that the university had engaged in deceptive advertising practices. The FTC alleged that the University of Phoenix falsely claimed to have relationships with prominent companies, including those in the Fortune 500, and implied that these connections would help students secure jobs. The university was also accused of posting the names and insignias of companies on an internal career portal, misleading students into thinking that they had exclusive access to job opportunities that were actually available to the general public.
In 2019, the University of Phoenix agreed to a $191 million settlement with the FTC, including a $50 million fine, to resolve charges of deceptive advertising used to attract prospective students. The FTC's complaint alleged that the university falsely claimed that its relationships with top companies created job opportunities specifically for its students and that these companies helped develop the curriculum. The university's "Let's Get to Work" campaign featured well-known employers such as Microsoft, Twitter, Adobe, and Yahoo!, giving prospective students the false impression that these companies were partners in creating job opportunities. The settlement, however, did not address the significant debts incurred by students as a result of their enrollment at the university.
The University of Phoenix has faced additional controversies beyond deceptive advertising. The university has been criticized for its low graduation rate of 17 percent, its aggressive recruitment tactics, and its status as a for-profit institution with students carrying the most student debt of any college. The Department of Defense ended its contract with the university for military bases in Europe in 2013. The University of Phoenix was also scrutinized by the government in 2010 for its deceptive enrollment practices, and in 2020, the Department of Veterans Affairs temporarily suspended certification for G.I. Bill funds for new students, citing a history of deceptive recruiting practices.
Students who believe they were deceived by the University of Phoenix's practices can explore legal options, such as filing a deceptive advertising lawsuit or submitting a borrower defense application for loan forgiveness. The eligibility criteria for loan forgiveness vary, and students should refer to official sources for up-to-date information on their rights and options for recourse.
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Student loan discharge costs
The terms "student loan forgiveness" and "student loan discharge" are often used interchangeably, but they differ in that forgiveness only erases any remaining debt at the time of qualification, whereas discharge typically results in a refund for past payments. Legitimate federal forgiveness, cancellation, and discharge programs are free to apply to, but there may be other costs to consider. For example, if you choose to consolidate your loans, you may be able to lower your interest rate or change your terms, which could save you money over the life of the loan or lower your monthly payments. However, the longer you pay on a consolidated loan, the more the loan will cost you in interest.
Student loan discharge programs are available to students in extreme situations, such as those whose school defrauded them, or who cannot work due to a permanent disability. In the case of the University of Phoenix, the US Department of Education announced that some federal student loans provided to attendees would be discharged due to the for-profit university's improper student recruitment advertisements. The Biden administration will forgive about $37 million in student loans for borrowers who attended the University of Phoenix between September 21, 2012, and December 31, 2014. The Education Department will attempt to recoup discharge costs from the University of Phoenix's current owners, Apollo Global Management.
To be considered for student loan forgiveness or discharge, an application must be submitted. In the case of the University of Phoenix, a borrower defense application must be filed. If your application is approved, you will receive a notification via email. If your loan is approved for forgiveness, it will remain in forbearance/stopped collections status, where it has been since student loans were placed on hold in March 2020.
In addition to fraud and permanent disability, there are several other reasons why a student loan may be discharged. These include the closing of a school, bankruptcy, disaster situations, or severe physical and mental impairments.
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Student loan discharge and bankruptcy
Student loan debt can be discharged in bankruptcy, though it is generally considered a last resort due to its potential negative impact on credit scores and the time and costs involved. To discharge student loan debt in bankruptcy, one must demonstrate undue hardship, which is ultimately determined by the court. The Department of Justice (DOJ) will ask borrowers to fill out an attestation of undue hardship, and if they agree that the borrower is experiencing undue hardship, they will recommend that the judge discharge the student loans.
Factors that the DOJ and the court consider when deciding whether or not someone is experiencing undue hardship include income, expenses, and family size. For example, a 50-year-old student loan borrower earning $8.50 per hour as a telemarketer was granted a discharge because they did not earn enough to pay off their loans, meet their basic needs, and were trapped in a "cycle of poverty." Similarly, a married couple was able to discharge their student loans by showing the court that they worked steadily, maintained a frugal budget, tried an affordable repayment plan, and were still unable to meet their basic expenses.
In addition to bankruptcy, there are other ways to have student loans discharged. For example, the US Department of Education announced that some federal student loans provided to attendees at the University of Phoenix between September 21, 2012, and December 31, 2014, would be discharged due to the university's improper student recruitment advertisements. To be considered for student loan forgiveness in this case, borrowers must file a borrower defense application.
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Frequently asked questions
Students who took out federal student loans to attend the University of Phoenix between 21 September 2012 and 31 December 2014 may be eligible for loan forgiveness.
To be considered for student loan forgiveness, you must file a borrower defense application. You can find instructions and information on the paperwork required on Studentaid.gov.
You can check the status of your application on the borrower defense page under “Manage My Applications”.
The loan discharge is based on the Federal Trade Commission's (FTC) 2019 court action against the University of Phoenix for using deceptive advertising practices to get students to enrol.
