The University of Phoenix, the nation’s largest for-profit college chains, agreed to a $191 million settlement for charges that the school had lured in students with fraudulent claims about partnerships with major companies that one of the chain’s own executives had described as “smoke and mirrors.”The school’s deceptions related to a marketing campaign that invoked A-list companies like Microsoft and Twitter, which affected students who enrolled between October 2012 and December 2016.
The Complaint filed a complaint in federal court in Arizona described the advertising campaign including a series of television ads and online postings from the university heralded its “corporate partnerships” with more than 2,000 employers, including the American Red Cross, AT&T and Yahoo. The ads said the school worked with those employers to “shape our curriculum” and “create options” for its graduates. In truth, the companies had no special hiring programs or curricular ties with the school, according to the F.T.C.’s complaint. One senior vice president at the school complained in an email that the use of the software company Adobe in advertisements was “smoke and mirrors” because the chain did business with the company but did not have any academic relationship with it.The complaint said the ads had prompted an executive at Staples, one of the featured companies, to send a note to the school asking, “What is Staples doing as part of this program?”The school also made “deceptive claims” about employment opportunities in ads targeted at military veterans, the F.T.C. said.
The school undertook the campaign as its enrollment was falling. University of Phoenix was once the nation’s biggest online university, with more than 460,000 students in 2010. But increased competition led to sharp drops in enrollment; the school now has around 97,000 students nationwide, and was sold in 2017 to Apollo Global Management, a private equity firm. The F.T.C.’s settlement, after an investigation that began more than four years ago, is the agency’s largest with a for-profit school. It previously settled complaints against two other chains, the DeVry Education Group and the Career Education Corporation, over what it said were false claims. For-profit colleges have been criticized for leaving students mired in debt for degrees that rarely led to well-paying jobs. A federal and state crackdown in the middle of the decade tightened regulations and pushed some of the largest chains into bankruptcy.