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The University of Phoenix and its parent company have an agreement to settle $50 million in cash and cancel $141 million in student debt to calm down the accusations of deceiving advertisement brought by the Federal Trade Commission.
The agreement was announced last Tuesday. It aims to settle a dispute over an ad campaign the for-profit college launched in 2012 flaunting partnerships with companies including Twitter, Adobe, and Microsoft. It suggested the school is connected with those companies to create job opportunities for students, even though there was no existing agreement as to what the investigators found.
The Federal Trade Commission said that the disbursement is the largest the company has ever obtained against a for-profit college.
According to Andrew Smith, director of the Federal Trade Commission's Bureau of Consumer Protection, students need the facts when deciding about their education, not imaginary job opportunities that do not exist.
The University of Phoenix said in a statement that much of the disagreement focused on one ad campaign that ran from 2012 to 2014. The university said it agreed to settle the deal to avoid any more interference from serving students.
The campaign happened under prior ownership and was finalized before the FTC's inquiry began. The company continues to believe that the university acted appropriately
Apollo Education Group is the owner of the University of Phoenix. The Arizona-based for-profit college chain has 55 campuses located in different nations and teaches thousands of students via online programs. It's the nation's biggest receiver of GI Bill tuition benefits for military veterans.
Under the agreement, the University of Phoenix and Apollo will terminate all remaining debt for students who first enrolled from October 1, 2012, until the end of 2016. Letters will be sent to the borrowers to inform them that they no longer owe payments to the school. The school is also banded from making false claims about its relationships with different companies or employers.
The FTC says the $50 million payment will be used to assist consumers who were affected by the misleading ads.
According to the FTC's complaint, the University of Phoenix created the 2012 ad campaign to differentiate itself from other industry players as the chain's enrollment was falling. After conducting market research, investigators found, the chain adopted an ad tactic tying the school to successful career results. The said campaign was known as "Let's Get To Work!"
In a TV ad that aired in 2012, a disturbed driver weaves through a crowded parking lot looking for a vacancy. As a narrator said that the University of Phoenix works with high-end companies, cars are suddenly lifted out of parking spaces and changed with logos for companies including Microsoft and the American Red Cross. Many companies that were inquired to join in the ads raised complaints about the way they were being represented, investigators found.
The settlement was commended by some educational groups, including Veterans Education Success, which main advocacy is to help military veterans. The organization's president, Carrie Wofford, thanked the FTC for its work. She said that enough is enough. It's time to end the defrauding of America's veterans and service members by predatory colleges.
