This article is about the record settlement amount that the University of Phoenix is expected to receive in a loan forgiveness lawsuit. It also discusses the class action suit that was filed, the targeted military populations, and the false narrative that the school complied with the U.S. Higher Education Act’s 90/10 rule. If you have any questions, please feel free to contact us. We’re happy to help you resolve your debt.
Class action lawsuit
After being sued for deceptive marketing practices, the University of Phoenix settled a class-action lawsuit for loan forgiveness. The company agreed to forgive $191 million in student loan debt. However, this settlement does not include federal loans. Those eligible to apply for loan forgiveness must have applied for the program between October 2012 and December 2016.
Phyllis Price, who graduated from the University of Phoenix in 2005, took out student loans to pay for her studies. Her total loan was $36,868 with a 5.3 percent interest rate. Price was 52 years old when she started her studies. A University of Phoenix representative explained that refunds are sent within 14 days of the post-graduation posting to the student’s account. Nonetheless, a representative of the University of Phoenix told Phyllis Price that she should have received her money sooner.
The settlement includes $50 million in refunds and $141 million in cancellation of unpaid balances. However, this settlement does not apply to federal student loans. The University of Phoenix is one of many for-profit institutions accused of defrauding students. Last week, the Education Department canceled $1 billion in student loans for 72,000 borrowers who fell victim to the University of Phoenix’s fraudulent advertising campaigns. While this settlement is a significant step forward, it is still far from enough.
Record settlement amount
In a landmark loan forgiveness lawsuit, the University of Phoenix has settled for a record $191 million, including $50 million in refunds and $141 million in unpaid balances. Despite the record settlement, federal student loans remain unaffected. The university is one of several for-profit colleges accused of defrauding students. Last week, Education Secretary Miguel Cardona canceled $1 billion in loans for 72,000 former students.
The FTC launched an investigation in 2011 into the company and university, leading to the record settlement. The settlement awarded debtors $191 million, with $141 million of that coming in the form of loan forgiveness, and $50 million in cash refunds. Unlike some other loan lawsuits, however, this settlement only affected students whose loans were directly owed to the institution, and who enrolled between 2012 and 2016.
Targeted military populations
The University of Phoenix has been accused of deceiving veterans and their families through advertisements. The advertisements touted high-paying jobs with top companies. However, these advertisements targeted primarily the military and Hispanic populations, as they often lack the financial means for college. In addition, these advertisements omitted a significant number of veterans. However, the university has never admitted to any wrongdoing in the matter.
Unlike public colleges, for-profit universities have not had to worry about the impact of this lawsuit on their students’ credit scores. Because the fees are typically double or triple the number of public colleges, for-profit colleges spend heavily on recruiting veterans. In addition to recruiting military veterans, these schools have also violated federal law by using deceptive tactics. But while the government has yet to take action, advocates are hopeful that the lawsuit will lead to federal agencies enforcing the law.
The false narrative about compliance with U.S. Higher Education Act’s 90/10 rule
The Federal Government is working on legislation to make the military education benefits as valuable as the student aid provided to other students. Despite widespread criticism of the 90/10 rule, it is a critical part of the education reform process. If it were universally applied, it would likely result in a greater regulatory burden for both for-profit and nonprofit universities. Moreover, the new rules would disproportionately affect for-profit colleges, which rely on federal aid more heavily than nonprofit institutions.
While some schools argue that a high percentage of disadvantaged students makes them more likely to fail the 90/10 rule, there is no evidence to support this claim. Historically, institutions that have a high share of Pell Grant students are the least likely to fall out of compliance with the rule. However, in the for-profit sector, the opposite is true. Higher proportions of Pell Grant students are the only significant predictor of non-compliance with the 90/10 rule in the for-profit sector.