Janice Lozano
The University of Phoenix has been accused of preying on vulnerable students and passing them to increase profits. The for-profit college has been the subject of numerous federal investigations and lawsuits for deceptively recruiting students with the promise of useful degrees and providing worthless diplomas. In 2019, the university settled a massive fraud case with the Federal Trade Commission (FTC) and agreed to pay a settlement of $191 million for deceptive practices, including false advertising and misleading claims about job opportunities. The FTC's continued enforcement action against the University of Phoenix has led to student loan forgiveness for affected students, totalling nearly $37 million in federal loans.
| Characteristics | Values |
|---|---|
| Student Demographics | 70% women, 35% African American, 18% Hispanic, average age for new students is 38 |
| Graduation Rate | 13% or 21% of the national average |
| Student Debt | $35 billion in student loan debt in 2015 |
| FTC Settlement | $191 million |
| Student Loan Forgiveness | $37 million |
| Student Loan Forgiveness Beneficiaries | 1,200 students |
| Student Grant Money | $656.9 million in Pell Grant money |
| Student Financial Aid | $2.48 billion in financial aid funds |
| Student Body | 78,600 students enrolled in 2010 |
| Faculty | 97% part-time instructors, 21 cents of every tuition dollar spent on instruction |
| Student-Faculty Ratio | 110 to 1 |
| Owner | Apollo Global Management and Vistria Group |
| Parent Company | Apollo Group |
| Revenue Sources | Employers subsidizing the education of their managers, government grants and loans |
| Advertising | Deceptive, misleading |
| Advertising Spend | $220 million |
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What You'll Learn
University of Phoenix's low graduation rate and poor student outcomes
The University of Phoenix has been criticised for its low graduation rate and poor student outcomes. The for-profit college has been accused of preying on vulnerable students and providing them with worthless diplomas.
In 2019, the Federal Trade Commission (FTC) charged the university with running a deceptive advertising campaign from 2012 to 2014. The FTC alleged that the university falsely claimed partnerships with top companies to create job opportunities for its students. As a result, the University of Phoenix agreed to pay a $191 million settlement, which included $50 million in cash distributed to over 100,000 former students and a $141 million cancellation of student debt.
The University of Phoenix has also been criticised for its aggressive advertising and poor student outcomes. In 2024, the Idaho House voted to reconsider the purchase of the university due to its reputation as a predatory company with poor outcomes. The University of Phoenix has a low graduation rate, with only about a quarter of students graduating within eight years of enrolment. This is significantly lower than the national four-year average of 21%.
The University of Phoenix's low graduation rate has had financial implications for its students. According to the College Scorecard, nearly three-quarters of the class is left in default, leading to poor credit reporting, wage garnishment, tax offset, and collection fees. Additionally, some students have reported that having the University of Phoenix on their resume has harmed their job prospects.
The University of Phoenix's poor student outcomes can be attributed to several factors. Firstly, the university has a high reliance on part-time faculty, with about 97% of instructors teaching part-time. This is significantly higher than the national average of 47%. Critics have argued that this reliance on contingent faculty prioritises consistency and profit maximisation over educational quality.
Furthermore, the University of Phoenix, as a for-profit institution, has been accused of treating students as profit centres. In 2010, the university received more than $4 billion in taxpayer-funded aid for 470,000 mostly working online and in-person students. The university's revenue comes largely from employers subsidising the education of their managers and from student loans and grants. This financial structure incentivises the university to focus on recruitment and enrolment numbers rather than educational quality and student success.
In conclusion, the University of Phoenix's low graduation rate and poor student outcomes can be attributed to its prioritisation of profit over educational quality. The university's deceptive advertising, aggressive recruitment practices, and reliance on part-time faculty have contributed to its poor reputation and negative impact on students.
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Deceptive marketing and advertising practices
The University of Phoenix has been criticised for its deceptive marketing and advertising practices. The Federal Trade Commission (FTC) began investigating the university in 2015 over an advertising campaign it ran from 2012 to 2014. In 2019, the FTC charged that the university had used deceptive advertising to attract prospective students, falsely claiming relationships and job opportunities with top companies. The University agreed to pay a settlement of $191 million related to these charges, which included $50 million in cash payments to former students and a $141 million cancellation of student debt.
The University of Phoenix has also been accused of aggressive and deceptive telephone selling. Sales managers created a high-pressure sales environment, with salespeople making false claims about the school's programs, financial aid, and transfer credits.
The University's advertising and recruitment practices have been described as predatory, targeting vulnerable populations and providing low-quality education at expensive tuition rates. The University has a low graduation rate, with only about a quarter of students graduating, and many students report that having the school on their resume harmed their job prospects.
The University of Phoenix's marketing and advertising practices have contributed to a negative reputation, with some employers reportedly laughing at the degree. The University's focus on profits over education has led to criticism and regulatory crackdown, with efforts made to block its acquisition by the University of Idaho due to concerns about its predatory practices.
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Targeting vulnerable populations
The University of Phoenix has been accused of targeting vulnerable populations through deceptive marketing and sales practices. The for-profit university has faced regulatory scrutiny, court decisions, and public outrage for its aggressive advertising and poor outcomes.
With a low graduation rate of only about 13%, the University of Phoenix leaves the majority of its students with undergraduate degrees that are not enough to pay off the expensive student loans they took out to finance their education. The high cost of tuition at for-profit institutions, often many times that of community colleges or state universities, puts a significant financial burden on students.
The University of Phoenix has been criticized for its deceptive advertising campaigns, claiming partnerships with prominent employers that did not exist. In 2019, the university settled a case with the Federal Trade Commission (FTC), agreeing to pay $190 million in compensation for deceptive advertising charges. The FTC also charged the university with falsely advertising relationships and job opportunities with top companies, resulting in a $191 million settlement in 2023 and loan forgiveness for affected students.
The business model of the for-profit college industry has been described as preying on vulnerable communities, including low-income individuals, single parents, and veterans, by promising upward mobility and tapping into public funds. The University of Phoenix has been identified as one of the worst offenders in this regard, aggressively targeting veterans for GI Bill funds and misrepresenting financial aid, degree completion times, and transfer credits to prospective students.
The University of Phoenix's practices have led to financial harm for students, including poor credit reporting, wage garnishment, tax offsets, and collection fees. The negative reputation of the university has also impacted the job prospects of its graduates, with some employers disregarding degrees from the institution.
The University of Phoenix's targeting of vulnerable populations has had significant financial and opportunity costs for its students, contributing to public outrage and regulatory pushback against the for-profit higher education industry.
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Regulatory crackdown and hostile public opinion
The University of Phoenix has been the subject of numerous federal investigations and lawsuits for deceptively recruiting students with the promise of useful degrees and providing them with worthless diplomas. The public outrage at how the for-profit education industry has exploited vulnerable Americans through deceptive advertising and sales practices has driven a regulatory crackdown that has greatly diminished Phoenix's profile and fortunes.
The Federal Trade Commission (FTC) began investigating the university in 2015 regarding a misleading advertising campaign it ran from 2012 to 2014. In 2019, the FTC charged that the university used false advertising to recruit students by claiming partnerships to set them up for jobs with big companies like AT&T, Microsoft, and Yahoo. The University of Phoenix agreed to pay a settlement of $191 million, which included $50 million in cash distributed to over 100,000 former students and a $141 million cancellation of student debt.
The University of Phoenix has also been criticized for its aggressive advertising and poor outcomes. In 2022, a California state court decision revealed that sales managers created a "boiler room" selling environment, where salespeople misrepresented the school's programs and misled prospects about factors relevant to their enrollment decisions, such as financial aid and degree completion times. The University of Phoenix's graduation rate is only about 13%, which is significantly lower than the national four-year average of 21%. As a result of the school's poor outcomes and deceptive practices, the U.S. Department of Education has approved federal student loan forgiveness for affected students.
The University of Phoenix's attempt to be acquired by the University of Idaho, a non-profit university, has also faced backlash. Several senators, including Elizabeth Warren and Dick Durbin, have expressed concern that the acquisition will allow Phoenix to continue its predatory practices under the guise of a trusted public university. The deal has been criticized as a bailout that will reward Phoenix's malpractice and shield it from further legal repercussions. The Idaho House has voted to urge the State Board of Education to reconsider the purchase, citing the University of Phoenix's poor reputation and the potential risk to the state.
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University of Phoenix's acquisition by the University of Idaho
The University of Phoenix has been accused of deceptive recruitment practices, providing worthless diplomas, and preying on vulnerable students. The for-profit college has been the subject of numerous federal investigations and lawsuits, resulting in a $191 million fraud settlement with the FTC in 2019.
In May 2023, Idaho's state board of education approved the University of Idaho's plans to create a nonprofit corporation, NewU, to acquire the University of Phoenix for $550 million. The University of Idaho, a traditional college, aims to expand its reach into the lucrative market for online education targeting working adults. The University of Phoenix, on the other hand, has seen a significant decline in enrollment and has been seeking a buyer for over two years.
The deal has faced opposition from various quarters, including senators like Elizabeth Warren and Dick Durbin, who have expressed concerns about the University of Phoenix's predatory practices and the potential risk to the state of Idaho. The Idaho House voted to urge the State Board of Education to reconsider the purchase, citing the University of Phoenix's poor reputation and potential liabilities. Higher education experts have also warned about the political and reputational risks for the University of Idaho. The acquisition still requires approval from the U.S. Department of Education and accrediting boards, and it remains to be seen whether the deal will ultimately go through.
The University of Idaho's acquisition of the University of Phoenix is part of a larger trend of traditional colleges and universities expanding into the market for online education targeting working adults. It also reflects the disassembly of the for-profit higher education industry due to hostile public opinion, regulatory crackdowns, and court decisions. The University of Phoenix's owners plan to contribute $200 million in cash to the new corporation, and the University of Idaho expects to receive a $10 million annual supplemental funding, which is expected to grow over time.
The University of Idaho's President Scott Green has defended the deal, stating that it will diversify revenue streams and provide greater economic stability for delivering educational opportunities. However, critics argue that the University of Idaho is prioritizing revenue over quality and that the association with the University of Phoenix will hurt its reputation and devalue the degrees of its students. The deal has also been criticized for its potential impact on unsuspecting students and the people of Idaho.
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Frequently asked questions
Yes, the University of Phoenix is a private, for-profit university headquartered in Phoenix, Arizona.
The University of Phoenix has been the subject of numerous federal investigations and lawsuits for deceptively recruiting students with false advertising and misleading information. In 2019, the university settled a massive fraud case with the Federal Trade Commission (FTC) and agreed to pay a $191 million settlement for deceptive practices.
The University of Phoenix claims an eight-year college graduation rate of about 13%, which is significantly lower than the national four-year average of 21%. According to federal data, the university's graduation rate is even lower at 17%.
The University of Phoenix has denied any wrongdoing and has not admitted fault as part of the settlements. However, they have agreed to pay millions of dollars in refunds and debt cancellations to affected students.
The University of Phoenix has a poor reputation among the public and employers. Many students have reported that having the university on their resume harmed their job prospects. The university has also been criticized for its high costs, aggressive advertising, and focus on profits over education quality.
