Lana Oconnell
The University of Phoenix has been involved in several controversies related to student loans. In 2019, the Federal Trade Commission (FTC) charged the university with using deceptive advertising to attract students, leading to a $191 million settlement, including $50 million in cash distributed to former students and a $141 million cancellation in student debt. The Department of Education has also approved federal student loan forgiveness for students who attended the university between September 21, 2012, and December 31, 2014, and were deceived by the school's job placement claims. Additionally, the University of Phoenix was included in a class action lawsuit brought by over 200,000 student borrowers in 2019, which resulted in the cancellation of nearly $37 million in federal student loan debt for borrowers enrolled during the specified period. The university has also been criticized for its high student-to-teacher ratio and aggressive recruitment tactics, with a focus on eligibility for federally funded student loans.
| Characteristics | Values |
|---|---|
| Student-teacher ratio | 132 to 1 |
| Student employment rate | 78% |
| Student loan default rate | 47% |
| Graduation rate | 15% |
| Student loan repayment status | 32% in forbearance, 28% not making progress, 13% in deferment, 11% defaulted, 7% making progress, 5% delinquent, 2% paid in full, 1% discharged |
| University ranking | 386th out of 391 schools in the 2021 Washington Monthly list of national universities; #331-440 in the 2022 edition of the U.S. News & World Report National Universities |
| Student loan cancellation | Included in student loan cancellation due to alleged fraud; $37 million of federal student loan debt canceled by the Biden administration in September 2023 |
| Student loan forgiveness | Federal student loan forgiveness approved by the Department of Education for students deceived by the university's job placement claims who submit valid applications for borrower defense |
| Student loan debt | $35 billion in student loan debt as of 2015 |
| Student loan settlement | $191 million settlement in 2019, including $50 million in cash distributed to former students and a $141 million cancellation in student debt |
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What You'll Learn
Student loan forgiveness for University of Phoenix students
The University of Phoenix has been accused of using deceptive advertising practices to attract students. The Federal Trade Commission (FTC) began investigating the university in 2015 regarding an advertising campaign it ran from 2012 to 2014. The FTC charged that the university had falsely claimed to work with employers such as Microsoft, Twitter, Adobe, and Yahoo to create job opportunities for its students and tailor its curriculum to the job needs of these companies. The University of Phoenix also used high-pressure sales tactics, including assertions that classes were filling up fast, to recruit students. Admissions counselors were paid based on their success in recruiting students.
In 2019, the FTC took legal action against the University of Phoenix, and the university agreed to pay a settlement of $191 million, including $50 million in cash distributed to over 100,000 former students and a $141 million cancellation in student debt. However, the settlement did not affect student borrowers' obligations for federal or private loans.
Following the FTC's action, the U.S. Department of Education (ED) announced that it would approve full federal student loan forgiveness for some University of Phoenix students. To be eligible for loan forgiveness, students must have attended the school between September 21, 2012, and December 31, 2014, been deceived by the school's claims, and submitted a valid application for relief through ED's Borrower Defense program. The ED is continuing to process new and existing applications, and all borrowers with approved claims will receive full loan forgiveness.
Students who believe they were deceived by the University of Phoenix and are seeking loan forgiveness should submit a claim through the Borrower Defense program. They can check the status of their application on the borrower defense page under "Manage My Applications." Even if students have already received a payment from the University of Phoenix settlement fund, they can still apply for loan forgiveness through the Borrower Defense program. Additionally, students can fill out the borrower defense form and talk to state legislators about why their loans should be forgiven, as well as connect with advocacy groups in Washington.
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University of Phoenix's high student loan default rate
The University of Phoenix has been criticized for its high student loan default rate and aggressive recruitment tactics. In 2016, a Brookings Institution study estimated the university's five-year student loan default rate at 47%, with a graduation rate of just 15%. The university's high default rate is likely due to a combination of rising fees, increasing student debt, and shrinking financial and educational returns.
The University of Phoenix has a history of aggressive student recruitment, with admissions counselors using high-pressure sales tactics and assertions that classes were filling fast to convince prospective students to enroll. The university has also been accused of deceptive advertising, falsely claiming to work with employers such as Microsoft and Twitter to create job opportunities for its students. These tactics led to a Federal Trade Commission (FTC) investigation in 2015 and a $191 million settlement in 2019, including $50 million in refunds to students and a $141 million cancellation in student debt.
The University of Phoenix's high student loan default rate has contributed to its low ranking among national universities. In 2021, it was ranked 386th out of 391 schools in the Washington Monthly list of national universities. The university's default rate also has negative consequences for its students, including constant phone calls from creditors and life-altering repercussions like wage garnishment.
In recent years, there have been efforts to address the University of Phoenix's high student loan default rate and deceptive practices. In 2023, the Department of Education announced that it would approve federal student loan forgiveness for students who attended the university between September 21, 2012, and December 31, 2014, and were deceived by the school's job placement claims. Additionally, the Biden administration canceled nearly $37 million of federal student loan debt for over 1,200 borrowers enrolled at the university during the specified period.
While these actions provide some relief to affected students, the University of Phoenix's high student loan default rate and aggressive recruitment tactics have had significant negative consequences for many students. The university's focus on profitability over educational quality has left students struggling with high debt and limited job prospects.
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Student loan debt cancellation due to alleged fraud
The University of Phoenix has been accused of fraudulent practices, including deceptive advertising and high-pressure sales tactics to recruit students. In 2019, the Federal Trade Commission (FTC) charged the university with using deceptive advertising to attract prospective students, claiming affiliations with companies like Microsoft, Twitter, and Yahoo to create job opportunities. The FTC's investigation led to a $191 million settlement, including $50 million in cash distributed to former students and a $141 million student debt cancellation.
The University of Phoenix was also one of 153 institutions included in a class action lawsuit brought by over 200,000 student borrowers in 2019, alleging substantial misconduct. The settlement was approved in August 2022, and in September 2023, the Biden administration canceled nearly $37 million in federal student loan debt for over 1,200 borrowers enrolled between September 21, 2012, and December 31, 2014.
The University of Phoenix has a low graduation rate of 15% and a high student loan default rate of 47%. The Department of Education has approved federal student loan forgiveness for students who were deceived by the school's job placement claims and submitted valid applications through the Borrower Defense program.
While loan forgiveness provides relief for affected students, it is important to address the root causes of student loan debt and fraudulent practices in the education system. The University of Phoenix case highlights the need for stricter regulations and oversight to protect students from predatory lending and deceptive marketing practices.
Additionally, the Federal Trade Commission has taken action against student loan debt relief scams, banning fraudulent operators from the industry and requiring them to turn over assets. The FTC works to protect consumers from false promises, fake reviews, and other deceptive tactics used by bad actors in the student loan debt relief space.
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University of Phoenix's deceptive advertising to attract students
The University of Phoenix has been accused of deceptive advertising to attract students. In 2019, the Federal Trade Commission (FTC) charged the university with using deceptive advertising to attract prospective students. The FTC alleged that the university falsely claimed to work with employers such as Microsoft, Twitter, Yahoo, Adobe, and AT&T to create job opportunities for its students. The FTC also claimed that the university targeted military personnel, veterans, and Hispanic students with its deceptive advertising.
The University of Phoenix has denied any wrongdoing but agreed to pay a settlement of $191 million, including $50 million in cash distributed to over 100,000 former students and the cancellation of $141 million in student debt. This settlement is the largest obtained by the FTC in a case against a for-profit school.
The University of Phoenix has also been included in a class action lawsuit brought by over 200,000 student borrowers in 2019, alleging fraud. As a result, the Biden administration canceled nearly $37 million in federal student loan debt for more than 1,200 borrowers who attended the university between September 21, 2012, and December 31, 2014.
Prior to 2010, the University of Phoenix was also criticized for using high-pressure sales tactics to recruit students, including assertions that classes were filling up quickly. The university's recruiters were paid based on their success in enrolling new students. Additionally, the university has been accused of increasing tuition fees after students had already enrolled, leading some students to drop out due to the inability to afford the increased costs.
The University of Phoenix's settlement with the FTC does not address federal and private loans, and many students are still seeking relief from their student loan debt. Some students have expressed frustration that the settlement does not go far enough to address the harm caused by the university's deceptive advertising practices.
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Student experiences with University of Phoenix's financial aid
The University of Phoenix has been accused of deceptive advertising and misleading recruitment practices, which led to a $191 million settlement in 2019. The settlement included a $50 million cash payout to former students and a $141 million cancellation in student debt. Despite this, many students are still burdened with loan repayments and have expressed frustration over feeling deceived by the university's practices.
Student experiences with the University of Phoenix's financial aid processes have been mixed. The university offers a range of financial aid options, including grants, scholarships, and loans. They provide financial advisors to guide students through the process and help them explore funding options. The University of Phoenix also participates in the Federal Student Aid program, which allows students to complete the Free Application for Federal Student Aid (FAFSA) to determine their eligibility for federal grants and loans.
Some students have shared positive experiences, appreciating the support and guidance provided by the university's financial advisors. They found the process helpful in understanding their funding options and managing their finances. The fixed tuition rate offered by the University of Phoenix provides students with the assurance that their tuition costs will remain stable throughout their program.
However, other students have had negative experiences with the University of Phoenix's financial aid processes. Some have accused the university of engaging in predatory lending practices, with high-pressure sales tactics and a lack of transparency. Students have reported being deceived about the availability of funding and the existence of partnerships with employers for job opportunities. In some cases, students were pressured to take out additional loans to support their existing loans, and unexpected tuition increases left them unable to afford their education.
The University of Phoenix has faced significant scrutiny and legal action due to its lending and recruitment practices. As a result, there have been efforts to provide loan forgiveness to students who attended the university between September 21, 2012, and December 31, 2014, if they were deceived by the school's claims and submitted valid applications for relief through the Borrower Defense program.
Overall, while the University of Phoenix offers financial aid options and advisory services, some students have experienced negative consequences and continue to struggle with loan repayments due to the university's past practices.
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Frequently asked questions
No, the University of Phoenix is not removing student loans. However, in 2023, the U.S. Department of Education announced that it would approve federal student loan forgiveness for students who attended the University of Phoenix between September 21, 2012, and December 31, 2014, and were deceived by the school's job placement claims.
To be eligible for loan forgiveness, students must have attended the University of Phoenix between September 21, 2012, and December 31, 2014, been deceived by the school's job placement claims, and submitted a valid application for borrower defense through the ED's Borrower Defense program.
You can check the status of your application on the borrower defense page under "Manage My Applications." The Department of Education will also notify you if your claim is approved.
The University of Phoenix offers various options for student loan repayment. These include federal student loans, grants, scholarships, and private loans. Students can also set up an online account with their loan servicer, enroll in automatic debit, and explore tools and tips to manage their loans effectively.
