The Biden administration has approved a $37 million student loan forgiveness scheme to provide relief for students who the Education Department says were “brazenly” deceived by an Arizona-based university.
Over 1,200 borrowers who attended the University of Phoenix will have their student debt canceled after an investigation by the Federal Trade Commission (FTC) that was reviewed by the Department of Education (DOE) found that the school deceived prospective students with false ads about job opportunities in a bid to persuade them to attend.
“Students deceived by the University of Phoenix deserve strong relief, and today’s action is an important step forward,” Samuel Levine, director of FTC’s Bureau of Consumer Protection, said in a statement.
A spokesman for the University of Phoenix told The Epoch Times via email that the claims were “inaccurate, baseless, or incomplete,” were never tested in court, and the school denies any wrongdoing.
The $37 million payout to borrowers who were affected by the deception brings the total amount of debt cancellation approved by the Biden administration to over $117 billion. This includes nearly $15 billion in relief for some 1.1 million borrowers whose colleges either closed abruptly or unfairly took advantage of students.
The Biden administration has taken a narrower approach to advance President Joe Biden’s pledge to forgive student loans after the Supreme Court blocked a wide-ranging initiative to cancel up to $20,000 in student debt per student.
‘Mounds of Debt and Useless Degrees’
Wednesday’s announcement caps a multi-year investigation led by the FTC into the University of Phoenix and its parent company, Apollo Education Group, Inc.
The FTC sued the two in 2019, alleging in its complaint (pdf) that, since at least 2012, the defendants had deceptively advertised the benefits of an education at the university.
Specifically, the FTC alleged that the defendants used television, radio, and internet advertisements that misrepresented the University of Phoenix’s relationships with major companies like Adobe and Microsoft while falsely claiming that these relationships would provide career or employment opportunities.
The school also made the misleading claim that the University of Phoenix had worked with such firms—which included many Fortune 500 companies—to develop a curriculum, per the FTC’s complaint.
The FTC’s multi-year investigation into the university was ultimately resolved in 2019, and, as part of a record $191 million action, the school was ordered to pay the FTC $50 million to make payments to former students.
The University of Phoenix was also ordered to cancel $141 million in private student debt that was owed directly to the school.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” The DOE’s federal student aid chief operating officer Richard Cordray said in a statement. remove
“Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees,” Mr. Cordray added.
‘Adamantly Disagree’
A spokesman for the University of Phoenix told The Epoch Times via email that it disagrees with the premise of the FTC’s and the DOE’s claims of deception.
“We respectfully but adamantly disagree with the U.S. Department of Education’s allegations related to the Dec. 2019 University of Phoenix settlement with the Federal Trade Commission (FTC),” the spokesperson said.
The University of Phoenix maintains its innocence, the spokesperson continued, while adding that it takes student borrower complaints “very seriously.”
The school has provided the DOE with evidence “refuting inaccurate, baseless, or incomplete claims,” the spokesperson said, adding that it’s not against relief for borrowers with legitimate claims but that the school intends to “vigorously challenge each frivolous allegation and suspicious claim through every available legal avenue.”
The latest action was approved under the “borrower defense” student aid program that has been in place for decades.
Under the program, student loan borrowers who were misled by for-profit colleges are eligible to apply for forgiveness.
In August 2022, the Biden administration unveiled a plan to forgive up to $20,000 in student debt for around 40 million borrowers.
The Congressional Budget Office said the plan could cost about $400 billion, while the Wharton School estimated the price tag could exceed $1 trillion.
Then, in a split decision on June 30, 2023, the Supreme Court voted 6-3 to strike down President Joe Biden’s controversial debt forgiveness scheme.
Sixteen million people had been approved for debt relief and “the money was literally about to go out the door. And then Republican elected officials and special interests stepped in,” the president said, reacting to the ruling.
“They said no, no—literally snatching from the hands of millions of Americans thousands of dollars in student debt relief that was about to change their lives,” he added.
“Today’s decision has closed one path, and now we’re going to pursue another,” he said, promising to provide further student loan relief by other means.
From The Epoch Times