The Obama Administration Is Coming For The University Of Phoenix

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Blake Neff Reporter
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The University of Phoenix, one of the largest and most high-profile for-profit colleges in the country, is being hit with an investigation by the Federal Trade Commission.

The investigation targets the school’s parent company, Apollo Education Group, and is looking to see whether the company’s advertising used deceptive practices in order to lure in prospective students. As part of the probe, Apollo will have to turn over a treasure trove of documents pertaining to marketing, tuition, military recruitment practices, and more, dating all the way back to January 2011. Apollo issued a statement saying it was cooperating fully with authorities. (RELATED: Another For-Profit College Bites The Dust)

Complaints about deceptive marketing by for-profit schools are nothing new, as schools both large and small have repeatedly been accused of misrepresenting graduation rates, job prospects, and other key pieces of information in order to recruit students. Claims about such deceptive practices played a major role in the death of major for-profit chain Corinthian Colleges earlier this year. (RELATED: Obama Administration Kills Corinthian Colleges)

The new inquiry is the latest in a series of major blows to hit for-profit education companies. On July 1, the Department of Education implemented its new “gainful employment rule,” cutting off federal student loans to for-profit programs that have too many graduates fail to get good jobs after graduation. The rule is expected to cut off funds to a substantial number of programs. In May, major for-profit chain ITT Educational Services was charged with fraud by the Securities and Exchange Commission. A month before that, Corinthian shut down its campuses.

Thus far, Phoenix had managed to avoid the federal hammer, but it had still fallen a long way from when it gave its name to the Arizona Cardinals’ football stadium. In the past five years it has declined from about 400,000 students to barely 200,000, and it expects to lose another 50,000 in the next year. It’s had to shutter over 100 campuses and will almost certainly lose more.

It’s also had to fend off claims of improper practices, often paying huge settlements to avoid litigation. In 2004 it paid the Department of Education $10 million to settle a case related to claims it pressured recruiters to enroll unqualified students. In 2009 it paid over $78 million to settle a case where two recruiters said they illegally paid recruiters based on the raw number of students they enrolled. More recently, it’s attracted criticism from those who say the school has cultivated an inappropriately close relationship with the U.S. military in order to attract veterans and their GI Bill funds.

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