Students who took out loans to attend the for-profit University of Phoenix under the belief that the school offered them unique job opportunities at top organizations will have their debt forgiven, the Biden administration announced Wednesday.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Federal Student Aid Chief Operating Officer Richard Cordray. “Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees.”
The relief will total nearly $37 billion for 1,200 students, the Department of Education (ED) said.
ED found that Phoenix made substantial misrepresentations during its “Let’s Get to Work” national ad campaign, which ran between September 2012 and December 2014. The ads claimed that a Phoenix degree would help students “get [their] foot in a few thousand doors,” and that well-known employers, including Microsoft, Adobe, and AT&T, had job opportunities available specifically for Phoenix students.
In truth, ED said, Phoenix’s relationships with those companies provided no benefit to students. The companies’ logos were, however, displayed in the school’s career portal, creating the false impression that Phoenix offered unique leads. Phoenix was aware of the deception, according to ED: one senior vice president referred to the ads as “smoke & mirrors.”
This is not the first time that the campaign has gotten Phoenix into trouble. In 2019, the university agreed to pay a $50 million fine and forgive $140 million in fees for students lured in by the same ads, following a five-year Federal Trade Commission investigation. Evidence from the FTC’s probe was used in ED’s inquiry.
Phoenix, whose enrollment has dropped from nearly half a million students in 2010 to 85,000 today, is currently in the process of being purchased for $550 million by the University of Idaho, which plans to convert it into a non-profit. The deal has been criticized by Idaho faculty members and Senate Democrats, who warned against purchasing a school beset by investigations and potential liabilities.
“These allegations do not reflect University of Phoenix we know today,” said an Idaho spokesperson. “We value the student focus and vision University of Phoenix has today and stand by our commitment to affiliate.”
Earlier this year, the University of Arkansas had considered buying Phoenix, but ultimately decided not to due to concerns about the school’s past.
In a statement, Phoenix pledged to fight claims that it said were illegitimate.
“The University of Phoenix takes student borrower complaints very seriously and has provided significant evidence to [ED] refuting inaccurate, baseless, or incomplete claims,” it said. “While the University is not against relief for borrowers who have valid claims, we intend to vigorously challenge each frivolous allegation and suspicious claim through every available legal avenue.”
The Biden administration also announced that it would seek to recoup the cost of the forgiveness from Phoenix. Doing so may be challenging. After ED tried to claw back forgiven debt for students from DeVry University in 2022, the for-profit institution sued. The case is ongoing.
Meanwhile, ED has promised to notify affected Phoenix borrowers by early October. Those who believe they may qualify for relief can apply at StudentAid.gov/borrower-defense.
