Economy

The University of Phoenix Just Got A Rude Awakening

July 30th 2015

By:
Kyle Jaeger

The University of Phoenix is under investigation by the Federal Trade Commission—the latest development to come out of the federal crackdown on for-profit colleges, which ATTN: has been closely following.

One of the largest for-profit colleges in the country with more than 200,000 students enrolled as of 2015, University of Phoenix must provide the agency with four years worth of documents related to its finances, marketing, accreditation, and military recruitment. The FTC probe will seek to determine whether or not the institution engaged in "deceptive practices."

For-profit colleges have garnered a lot of media attention and public scrutiny in the past few years, but the most recent wave of criticism appears to be connected to revelations about the predatory business practices of these schools and their administrators that have been divulged through a series of federal investigations. Last year, comedian John Oliver raised the profile of many for-profit colleges and their deceptive practices, stating "they've given us all a first-class education in the depths of human depravity."

University of Phoenix is one of the best-known for-profit colleges in the U.S., but it is by no means the only one—and the most common criticism of these educational companies is that they overload students (particularly low-income students, who they're accused of targeting) with loans that many struggle to pay back to cover the costs of tuition. Part of the reason these students struggle to repay loans is that for-profit colleges, though officially accredited, often leave graduates with limited job prospects.

This month, new federal laws went into effect that are designed to hold these schools accountable for the "return on investment" of their degree programs, CNN reported. "The new set of rules, called the gainful employment regulations, require colleges to track their graduates' debt and employment to prove that their programs don't fall short of federal guidelines. Institutions now have to provide information on program costs, how much students earn after they graduate, and how much debt they could accumulate."

In April, another for-profit school, Corinthian College, was fined $30 million after the Department of Education determined that it has deceived students by intentionally misrepresenting its job placement rates for graduates. All of Corinthian's 28 campuses, where tens of thousands of students were enrolled, have since been shut down.

"Despite charging above-average tuition, Corinthian's colleges, which in 2013 received nearly 85 percent of their revenue through federal loans and grants, weren't producing the outcomes they had promised," the Atlantic noted. "In fact, most of the for-profit industry's students rely on loans and grants to attend school, meaning the federal government is more or less bankrolling these institutions."

Now that the government has been made aware of these business practices and allegedly deceitful policies, a federal crackdown is underway, continuing with this most recent investigation.

The parent company of University of Phoenix, Apollo Education Group, said that it is "evaluating the demand and intends to cooperate fully with the FTC."