Litigation and controversies of the University of Phoenix

The University of Phoenix is a private for-profit university headquartered in Phoenix, Arizona, founded in 1976. Into the 2000s, the school has been the subject of lawsuits and controversies related to its operations and government affiliations.

History by ownership

Founding, Apollo Group

The University of Phoenix was founded in 1976 by John Sperling and John D. Murphy.[1][2] In 1994, UoPX leaders made the parent company, Apollo Group, public.[3][4]

Events (1976-2015)

In 2000, the federal government fined the university $6 million for including study-group meetings as instructional hours. In 2002, the Department of Education relaxed requirements on instructional hours.[5][6]

A 2003 lawsuit filed by two former university recruiters alleged that the school improperly obtained hundreds of millions of dollars in financial aid by paying its admission counselors based on the number of students they enrolled, a violation of the Higher Education Act.[5] The university's parent company settled by paying the government $67.5 million, plus $11 million in legal fees, without admitting any wrongdoing.[7][8]

In 2004, the Department of Education alleged that UoPX violated Higher Education Act provisions that prohibit financial incentives to admission representatives, and pressured its recruiters to enroll students.[9] UoPX disputed the findings but paid a $9.8 million fine as part of a settlement where it admitted no wrongdoing and was not required to return any financial aid funds.[10][11][12] The university also paid $3.5 million to the Department of Labor to settle a violation of overtime compensation regarding hours worked by UoPX's recruiters.[13][14] UoPX settled a false claims suit for $78.5 million in 2009 over its recruiter-pay practices.[15]

In 2009, the Department of Education produced a report claiming the untimely return of unearned Title IV funds for more than 10 percent of sampled students. The report also expressed concern that some students register and begin attending classes before completely understanding the implications of enrollment, including their eligibility for student financial aid. In January 2010, the parent company Apollo Group was required to post a letter of credit for $125 million by January 30 of the same year.[16] In 2010, UoPX came under government scrutiny after its Phoenix and Philadelphia campuses were found to have engaged in deceptive enrollment practices and fraudulent solicitation of FAFSA funds.[17]

In August 2010, an ABC News investigation identified a UoPX recruiter who sought new students from Y-Haven, a homeless shelter in Cleveland, Ohio. Another University of Phoenix recruiter falsely claimed to an undercover television producer taking part in an investigation of the school that the university's Bachelor of Science in Education degree would be sufficient to qualify them to teach in Texas or New York.[18]

In 2014 the Department of Education's Office of the Inspector General demanded records from the school and Apollo Group going back to 2007 "related to marketing, recruitment, enrollment, financial aid, fraud prevention, [and] student retention".[19] In the same year, Arthur Green, a former UoPX enrollment advisor, sued the school and claimed that it had violated the US False Claims Act. According to Green, he was fired for uncovering billions of dollars in fraud.[20][21] Five years later, the case was dismissed in 2019 after the US Department of Justice under William Barr decided not to take the case and the records were sealed.[22]

In October 2015, the Department of Defense suspended the school's ability to recruit on U.S. military bases and receive federal funding for educating members of the U.S. military.[23] After protest from senators John McCain, Jeff Flake, and Lamar Alexander, the suspension was lifted in January 2016.[24][25]

The Federal Trade Commission (FTC) began investigating the university in 2015 in regard to an advertising campaign it ran from 2012 to 2014.[26][27] On December 10, 2019, UoPX agreed to pay a settlement of $191 million related to charges that it recruited students using misleading advertisements.[27] NPR reported the amount included $50 million in cash (which was later distributed as checks to more than 100,000 former students),[28][29] as well as a $141 million cancellation in student debt, though the cancellations "won't affect student borrowers' obligations for federal or private loans".[30] The institution admitted no wrongdoing as part of the settlement, which was at the time the largest FTC settlement against a for-profit school.[27]

Private investment group

In February 2016, Apollo Group announced its sale to a private investment group comprising Apollo Global Management, the Vistria Group, and the Najafi Companies, for $1 billion.[31]

Events (2016-2025)

In 2019, a class action lawsuit was filed by over 200,000 student borrowers due to allegations of fraud. The University of Phoenix was among 153 institutions named in the case. The lawsuit was supported by the Project on Predatory Student Lending, part of the Legal Services Center at Harvard Law School.[32] A settlement was approved in August 2022, stating that the schools on the list were included because of "substantial misconduct, whether credibly alleged or in some instances proven."[33][34] In April 2023, the Supreme Court rejected a challenge to the settlement and allowed the debt cancellation to proceed.[35]

In March 2020, the U.S. Department of Veterans Affairs (VA) announced that they had suspended certification for G.I. Bill funds for new students at UoPX, citing a history of deceptive recruiting practices.[36][37] The VA withdrew its threat of sanctions in July 2020.[38]

In April 2024, the University of Phoenix and California Attorney General Rob Bonta resolved an investigation into UoPX's use of military student recruitment tactics from 2012 through 2015 via settlement, where the university agreed to pay out $4.5 million in penalties and other fees.[39]

Phoenix Education Partners

On August 29, 2025, AP VIII Queso Holdings LP, the new parent company of the University of Phoenix, filed for an initial public offering. The company announced that its name would change to Phoenix Education Partners Inc. before the closing of the offering.[40][41][42]

Events (2025-present)

In November 2025, the University of Phoenix (UoPX) became one of several U.S. universities, including Harvard University and the University of Pennsylvania, affected by a data theft campaign linked to the Clop ransomware group. Attackers used a zero-day vulnerability in Oracle E-Business Suite software to steal information from students, staff, and suppliers. The university disclosed the data breach on its website and in its 8-K filing.[43]

References

  1. ↑ Ronald J. Hansen, Matthew Casey (August 26, 2014). "John Sperling, University of Phoenix founder, dead at 93". abcentral. Retrieved February 1, 2015.
  2. ↑ The Story of the University of Phoenix American Public Media. Retrieved 4 August 2020.
  3. ↑ "Hanford, Emily, The Story of the University of Phoenix, September 6, 2012". Publicradio.org. Retrieved November 5, 2018.
  4. ↑ Caleb Melby. "John Sperling – In Photos: Gangsters, Games and Gold: Billionaire Drop-Offs 2013". Forbes.
  5. 1 2 Dillon, Sam (February 11, 2007). "Troubles Grow for a University Built on Profits". The New York Times, February 11, 2007.
  6. ↑ "University's Owner Settles Federal Dispute Over Student Aid". The New York Times. May 14, 2000. Retrieved September 7, 2009.
  7. ↑ Gilbertson, Dawn (October 4, 2009). "University of Phoenix case may get closure". Arizona Republic. Retrieved October 4, 2009.
  8. ↑ "For-Profit Educator to Pay $67.5 Million Settlement". The Wall Street Journal. December 15, 2009. p. B4.
  9. ↑ "US DOE Program Review Report" (PDF). Kroplaw.com. Retrieved March 21, 2014.
  10. ↑ Blumenstyk, Goldie (October 8, 2004). "U. of Phoenix Uses Pressure in Recruiting, Report Says – Archives – The Chronicle of Higher Education". Chronicle of Higher Education. Retrieved October 5, 2013.
  11. ↑ "Student-recruitment Tactics at University of Phoenix Blasted by Feds Univ. of Phoenix Audit Leads to $9.8 mil Fine" The Arizona Republic, September 14, 2004, by Dawn Gilbertson
  12. ↑ "University of Phoenix Receives Record Fine" Austin Business Journal, September 14, 2004
  13. ↑ "University of Phoenix, Dept. of Labor Reach Overtime Agreement" Phoenix Business Journal, July 23, 2004
  14. ↑ "Apollo to pay Department of Labor $2M-$3M to Settle Case" Austin Business Journal, July 17, 2004.
  15. ↑ Gilbertson, Dawn (December 15, 2009). "Apollo Group Settles Suit for $78.5 Million". Arizona Republic. Retrieved May 30, 2011.
  16. ↑ "Apollo Repaid Education Aid Late, Gave Lax Counseling". BusinessWeek. Archived from the original on March 23, 2010. Retrieved January 10, 2010.
  17. ↑ Lauerman, John (August 4, 2010). "For-Profit Colleges Misled Students, Witnesses Say". Bloomberg News. Retrieved September 3, 2010.
  18. ↑ Cuomo, Chris; Vlasto, Chris; Wagschal, Gerry; Pearle, Lauren; Andreadis, Cleopatra (August 19, 2010). "ABC News Investigates For-Profit Education: Recruiters at the University of Phoenix". ABC News. Retrieved September 10, 2019.
  19. ↑ Lauerman, John (April 2, 2014). "Apollo Falls as Education Department Demands Records". Bloomberg News. Retrieved May 1, 2014.
  20. ↑ Trexler, Phil (February 15, 2017). "Investigator | Ex-recruiter alleges fraud at Univ. of Phoenix". wkyc.com. Retrieved December 17, 2020.
  21. ↑ Gonzales, Angela. "Whistler-blower lawsuit against University of Phoenix unsealed in district court". bizjournals.com. Retrieved December 17, 2020.
  22. ↑ Serino, Danielle (September 26, 2020). "University of Phoenix pays one of the largest school settlements in history". newscentermaine.com. Retrieved December 17, 2020.
  23. ↑ Douglas-Gabriel, Danielle (October 9, 2015). "Why the Defense Department is kicking the University of Phoenix off military bases". The Washington Post. Retrieved December 12, 2015.
  24. ↑ Hansen, Ronald J. (October 26, 2015). "McCain, Flake urge review of U of Phoenix military base ban". The Arizona Republic. Phoenix, Arizona. Retrieved January 18, 2016.
  25. ↑ "Pentagon Lifts Probation of U of Phoenix". Inside Higher Ed. January 18, 2016. Retrieved February 11, 2016.
  26. ↑ Lobosco, Katie (July 29, 2015). "University of Phoenix is the latest college under investigation". CNN Money. Archived from the original on August 1, 2015. Retrieved March 22, 2019.
  27. 1 2 3 Leingang, Rachel (December 19, 2019). "University of Phoenix settles FTC complaint". Arizona Business Gazette. Vol. 139, no. 51. Media West. USA Today Network. pp. 1, 12 – via Newspapers.com. Note: here is a link to the page 12 segment of the article.
  28. ↑ Swaminathan, Aarthi (March 24, 2021). "147,000 University of Phoenix students are being sent direct payments in deceptive advertising settlement". finance.yahoo.com. Yahoo Finance. Retrieved March 28, 2021.
  29. ↑ "University of Phoenix Settlement Payments". FTC.gov. July 2023. Retrieved July 30, 2023.
  30. ↑ Chappell, Bill (December 10, 2019). "University Of Phoenix Reaches $191 Million Settlement With FTC, Including Debt Relief". NPR. Retrieved December 11, 2019.
  31. ↑ Bomey, Nathan (February 8, 2016). "University of Phoenix to be sold amid shrinking enrollment". USA Today. Retrieved February 10, 2016.
  32. ↑ Wermund, Benjamin (June 25, 2019). "New lawsuit targets Trump administration for stalling on borrower defense claims". Politico. Retrieved June 26, 2019.
  33. ↑ "Government's Consolidated Opposition to Motions to Intervene" (PDF). Retrieved April 15, 2023.
  34. ↑ Turner, Cory; Carrillo, Sequoia; Salhotra, Pooja (August 5, 2022). "200k student borrowers are closer to getting their loans erased after judge's ruling". National Public Radio. Retrieved April 15, 2023.
  35. ↑ Hurley, Lawrence (April 13, 2023). "Supreme Court allows $6 billion student loan debt settlement". NBC News. Retrieved April 15, 2023.
  36. ↑ "VA to suspend some GI Bill enrollments, holding back more than $200 million from 'deceptive' universities". Stars and Stripes. Retrieved March 10, 2020.
  37. ↑ Gresik, Dylan; Shane III, Leo (March 9, 2020). "VA suspends GI Bill certifications for five universities over deceptive enrollment practices". militarytimes.com. Retrieved March 10, 2020.
  38. ↑ Douglas-Gabriel, Danielle (July 2, 2020). "VA backs down from plan to suspend University of Phoenix and other colleges from accessing GI Bill benefits". Washington Post. Retrieved July 3, 2020.
  39. ↑ "Attorney General Bonta Announces $4.5 Million Settlement with University of Phoenix for Unlawful Military Student Recruitment Tactics" (Press Release). State of California - Department of Justice. April 25, 2024.
  40. ↑ Lipschultz, Bailey (August 29, 2025). "University of Phoenix Files for IPO After Dropping Planned Sale". Bloomberg.
  41. ↑ Kannagi Basil, Arasu (August 29, 2025). "Apollo-backed Phoenix Education Partners files for US IPO". Reuters.
  42. ↑ Tan, Gillian. "Apollo, Vistria Weigh IPO or Sale of University of Phoenix". www.bloomberg.com. Bloomberg. Retrieved March 9, 2025.
  43. ↑ Gatlan, Sergiu (December 3, 2025). "University of Phoenix discloses data breach after Oracle hack". Bleeping Computer.
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