Student Loan Crisis: For-Profit University Of Phoenix To Cancel $141 Million In Student Debt Due To False Advertising

The University of Phoenix (UOP), along with its parent company Apollo Education Group, have agreed to cancel $141 million in student loan debt due to allegations of false advertising by the Federal Trade Commission (FTC). In 2012, the university used ads to promote its partnerships with companies such as Twitter and Microsoft, suggesting to students that the university had an agreement to help them find jobs with those firms.

There was, in fact, no employment agreement between the University of Phoenix and those companies. UOP will also have to pay $50 million in cash as part of the deal, for a total of $191 million.

"This is the largest settlement the Commission has obtained in a case against a for-profit school," said Andrew Smith, the director of the FTC's Bureau of Consumer Protection. "Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist."

UOP has refused to admit any wrongdoing as part of the final settlement.

For-profit universities have been the subject of political debate, as Education Secretary Betsy DeVos has attempted to ease regulations on the schools.

DeVos scrapped an Obama-era rule in June which was created to protect students from abusive for-profit schools. The rule, called Gainful Employment, forced some for-profit universities to post debt-to-earnings ratios, an indicator that graduates of the university would receive a high-paying job after graduation.

DeVos is also under fire by rejecting claims for debt relief from students who were defrauded by for-profit schools such as ITT Tech and Corinthian Colleges.