University of Phoenix Reprimanded For Abusing Government Aid Program

October 12th 2015

Alex Mierjeski

University of Phoenix, the for-profit college, has been suspended from a government tuition-assistance program after an investigation revealed underhanded marketing techniques used on U.S. veterans.

For-profit colleges, which are owned by for-profit companies, have faced increasing criticism recently for deceptive advertising, having profits as bottom lines, and low graduation rates. They have even been criticized before for targeting veterans.

Related: Why Is Everyone Talking About For-Profit Colleges Lately?

Effective immediately, the university said it would no longer be accepting students seeking to use the Tuition Assistance Program funds, which is part of a Department of Defense (DoD) program to help military members pay for eligible colleges. According to a DoD statement, the University of Phoenix "will not be authorized access to DoD installations for the purposes of participating in any recruitment-type activities, including but not limited to job training, and career events and fairs."

University of Phoenix was removed from the DoD's list of tuition-assistance-eligible colleges last Thursday.

The announcement comes after government investigations—spurred in part by a report by the investigative reporting outlet Reveal—into the school's advertising and marketing techniques. The Reveal report found that the school paid the military to sponsor recruiting events and other things like resume workshops where unofficial military insignia memorabilia were handed out by school officials. According to Reveal, the school received approximately $20 million in tuition through the Tuition Assistance Program last year.

As CNN Money notes, schools can receive up to 90 percent of their revenue from federal aid programs, but the DoD fund program doesn't count toward reaching that limit, giving for-profit institutions an incentive to target veterans.

Contacted by phone Friday afternoon for comment, University of Phoenix spokesman Ryan Rauzon directed ATTN: to a statement published on Medium by university president Tim Slottow, reprinted in full below.

"University of Phoenix intends to continue its cooperation with federal and state agencies to respond to their requests. We will continue to hold ourselves to the highest standards of accountability, transparency, ethics and compliance. The Department of Defense (DoD) in its letter of Oct. 7 acknowledged the corrective actions taken by the University to date. University representatives had been working closely with DoD leaders and we all expected a different response from DoD. It is troubling that the DoD has used requests for information from other governmental agencies as grounds for placing the University’s DoD MOU in a probationary status. At this time, the University will not accept new students who wish to use Tuition Assistance Program funds."

This is not the first time a for-profit institution has been criticized for going after veterans, and even for using similar tactics, like using official military insignias in marketing schemes. Schools have faced fines before for similar infractions, but University of Phoenix could face a permanent ban from the aid assistance program. The school is also under a Federal Trade Commission investigation for "deceptive marketing." President Obama has sought to ban aggressive marketing and recruitment techniques aimed at veterans with an executive order in 2012.