The University of Phoenix and its parent company have agreed to pay $50 million in cash and cancel $141 million in student debt to settle allegations of deceptive advertisement brought by the Federal Trade Commission.
The deal, announced Tuesday, settles a dispute over an ad campaign the for-profit college unrolled in 2012 touting partnerships with companies including Microsoft, Twitter and Adobe. It suggested the school worked with those companies to create job opportunities for students, even though there was no such agreement, investigators found.
The Federal Trade Commission said the settlement is the largest the agency has ever obtained against a for-profit college.
“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist,” said Andrew Smith, director of the Federal Trade Commission’s Bureau of Consumer Protection.
The University of Phoenix said in a statement that much of the dispute focused on a single ad campaign that ran from 2012 to 2014. It said it agreed to the deal “to avoid any further distraction from serving students.”
“The campaign occurred under prior ownership and concluded before the FTC’s inquiry began. We continue to believe the University acted appropriately,” the company said.
Apollo Education Group owns the University of Phoenix. The Arizona-based for-profit college chain has 55 campuses across the nation and teaches thousands of students through its online programs. It’s the nation’s largest recipient of GI Bill tuition benefits for military veterans.
Under the settlement, the University of Phoenix and Apollo will cancel all remaining debt for students who first enrolled between Oct. 1, 2012, and the end of 2016. Letters will be sent to borrowers saying they no longer owe payments to the school. The school is also barred from making false claims about its relationships with companies or employers.
The FTC says the $50 million payment will be used to help consumers who were misled by the ads.
According to the FTC’s complaint, the University of Phoenix created the 2012 ad campaign to distinguish itself from competitors as the chain’s enrollment was falling. After conducting market research, investigators found, the chain adopted an ad strategy tying the school to successful career outcomes. The campaign was called “Let’s Get To Work!”
In one TV ad that aired in 2012,