In the largest settlement obtained against a for-profit college, the University of Phoenix and its parent company, the Apollo Education Group, have agreed to cancel $144 million in student debt owed to the university and pay $50 million in cash to settle a dispute with the Federal Trade Commission, in a deal announced Tuesday.
The dispute is over the university using deceptive advertising to recruit students. An ad campaign for the university suggested falsely that the university had active partnerships with companies that included Microsoft, Twitter, AT&T, Yahoo, and Adobe, NBC reported. It suggested that the school worked with the companies to create job opportunities for its graduates.
“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist," the director of the Federal Trade Commission's Bureau of Consumer Protection, Andrew Smith, said.
While the university did not admit to any wrongdoing, it told The Hill in a statement that it had cooperated “fully with the FTC’s inquiry” and is “pleased to have reached this settlement agreement and resolved this matter.” The university also emphasized that it was a single advertisement that ran from 2012 to 2014 and that it believes it acted “appropriately.” “The campaign occurred under prior ownership and concluded before the FTC’s inquiry began. We continue to believe the University acted appropriately,” the university added.
Students who enrolled at the school any time between October 2012 and December 2016 will be able to have their remaining debts owed to the University of Phoenix and Apollo canceled as part of the settlement. Federal student loans are not covered under the agreement. While the affected students must repay federal loans, the FTC stated that those who believe they were deceived could apply for debt relief through the Education Department’s borrower defense to loan repayment system, The New York Times reported.
The $50 million cash payment will be used to help those who were misled by the ad campaign, the FTC said.