On Tuesday, the Federal Trade Commission announced a record settlement with the University of Phoenix. The for-profit college and its corporate parent, Apollo Education Group, will pay $191 million to settle federal charges alleging it marketed false job opportunities to students, including veterans and members of the military.
The agreement represents the largest settlement the FTC has ever reached with a for-profit college, the agency said. Under the terms of the deal, the company will pay the government $50 million in cash and will cancel $141 million in student debt held by students lured in by ads the government said were deceptive.
The FTC launched its investigation in July 2015, following an exposé by Reveal from The Center for Investigative Reporting, which documented how the for-profit college had sidestepped an executive order from President Barack Obama designed to halt predatory recruitment of servicemembers and veterans.
Those practices, Reveal found, helped make the University of Phoenix the largest single recipient of GI Bill funds. Since 2009, the company has received $2.1 billion under a program designed to provide a better future for Iraq and Afghanistan veterans.
“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement. The settlement does not include an admission of wrongdoing by the University of Phoenix.
As the Trump administration, under Secretary of Education Betsy DeVos, has rolled back regulations against for-profit colleges and nixed federal debt forgiveness programs for students who were misled by institutions of higher education, the FTC, an independent commission that includes both Democratic and Republican appointees, has pressed ahead with enforcement.
The University of Phoenix settlement follows on the heels of a $100 million FTC settlement against for-profit college DeVry in 2016 and a $30 million settlement against Career Education Corporation, the for-profit operator of Colorado Technical University and American InterContinental University, earlier this year for similar deceptive practices.
In its complaint, the government alleged the University of Phoenix ran advertisements in which the college falsely claimed to have relationships with companies including Adobe, Microsoft and Twitter, allowing it to create career opportunities specifically for University of Phoenix graduates.
The school also claimed to have special partnerships with companies, including AT&T and Allied Barton, that had allegedly set up hiring programs for University of Phoenix students who were veterans. In fact, the government said, those programs were available to all veterans, not only those who attended the University of Phoenix.
In a statement, the for-profit college said it “continues to believe it has acted appropriately” and that the settlement will “enable the University to maintain focus on its core mission of improving the lives of students.” It also pointed out that the allegations in the lawsuit were old, relating to activities that took place between 2012 and 2014.
But the deal could nonetheless have sweeping implications for the college’s ability to stay in business. Like most for-profit colleges, the University of Phoenix is heavily dependent on federal dollars, particularly the GI Bill, and a 1974 law forbids the Department of Veterans Affairs from providing funds to a school that employs “advertising, sales, or enrollment practices of any type which are erroneous, deceptive, or misleading either by actual statement, omission or intimidation.”
If the VA is unsure whether a school meets this standard, it is supposed to ask the FTC.
“It would be hard to claim that the Federal Trade Commission suing a school and receiving $200 million is not evidence of deceptive recruiting,” said Carrie Wofford, director of the national nonprofit group Veterans Education Success, “so this is going to put a lot of pressure on the VA.”