the University of Phoenix

University of Phoenix: $37M Student Loan Discharge Announced

The Department of Education made a significant announcement on Wednesday, declaring the discharge of approximately $37 million in student loans for over 1,200 former students who attended the University of Phoenix. This move is aimed at providing relief to borrowers who were enrolled at the institution between September 21, 2012, and December 31, 2014, and who have applied for a borrower’s defense loan discharge. The borrower’s defense discharge is a legal process that allows students to seek relief when their school has engaged in misconduct related to loans or educational services.


These affected borrowers are slated to receive emails from the Department of Education by early October, and no further action will be required on their part. Furthermore, any payments previously made to the department for related federal student loans will be refunded. However, for students who attended the University of Phoenix during the specified period but did not file for a borrower’s defense discharge, they must complete the application process on the Federal Student Aid website.


The Department of Education’s decision stems from its review of evidence obtained by the Federal Trade Commission (FTC) during a 2019 investigation into the University of Phoenix. The investigation concluded with a $191 million settlement. Richard Cordray, Chief Operating Officer at Federal Student Aid, stated, “The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll. Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees. Today’s announcement builds on the FTC’s work to provide relief to those affected by Phoenix’s misconduct and delivers on the Biden-Harris administration’s mission to support student loan borrowers.”


As of Wednesday, the Biden administration has discharged more than $117 billion in student loans, including $14.8 billion for 1.1 million borrowers who were taken advantage of by their colleges or faced abrupt closures. Through programs such as the “closed school loan discharge” and “borrower loan defense discharge,” students can apply to have their student debt discharged if their school closed while they were enrolled or if they were misled by the institution in any way.


The Department of Education found that the University of Phoenix had “brazenly deceived” borrowers through a national advertising campaign. The institution falsely claimed partnerships with thousands of corporations, including Fortune 500 companies, promising benefits such as hiring preferences at these companies for its students. In reality, the corporate partners merely allowed the University of Phoenix to display their logos in a career database portal, with the posted jobs available to the general public, not exclusively to Phoenix students. An unnamed senior vice president at the University of Phoenix even referred to one of the ads as “smoke and mirrors.” The misleading advertisements continued until December 2014.


The Department of Education is now pursuing efforts to recoup the costs associated with the borrower’s defense discharge and repayment of liabilities from the University of Phoenix. Borrowers who believe they were defrauded by the institution can apply for a borrower’s defense discharge on the Federal Student Aid website.


For the students who placed their trust in the University of Phoenix, unknowingly accumulating debt while receiving degrees of questionable value, the discharge of nearly $37 million in student loans offers a glimmer of hope amidst their challenging financial circumstances. This action reflects the Biden-Harris administration’s commitment to supporting student loan borrowers who have been adversely affected by deceptive practices within the education sector.

Source: Yahoo Finance

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