TEMPE, Ariz.–The University of Phoenix and its parent company have agreed to pay $50 million in cash and further agreed to cancel $141 million in student debt to settle allegations of deceptive advertisement brought by the Federal Trade Commission.
The deal would bring to a close a dispute over an ad campaign the for-profit University of Phoenix ran during 2012 in which it promoted partnerships with companies that included Microsoft, Twitter and Adobe. Investigators said the ads suggested the school worked with those companies to create job opportunities for students, even though there was no such agreement.
“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist," Andrew Smith, director of the Federal Trade Commission's Bureau of Consumer Protection, said in a statement.
The University of Phoenix said the dispute was limited to the single ad campaign that ran from 2012 to 2014 and that it was agreeing to the deal “to avoid any further distraction from serving students.”
55 Campuses Nationally
Apollo Education Group owns the University of Phoenix, which has 55 campuses across the nation and teaches thousands of students through its online programs.
According to authorities, 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.