Students who attended this university will receive $141 million of student loan forgiveness.
Here’s what you need to know.
Student Loan Settlement
The University of Phoenix, one of the nation’s largest for-profit colleges, and its parent company, Apollo Education Group, have agreed to cancel $141 million of student loans and pay $50 million to the Federal Trade Commission (FTC) as part of the settlement.
“This is the largest settlement the [FTC] has obtained in a case against a for-profit school,” said Andrew Smith, 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.”
The “fantasy job opportunities” that Smith references are part of the FTC’s allegations against University of Phoenix. The FTC alleges that University of Phoenix used advertising from 2012 to 2014 to target primarily military and Hispanic consumers. The company’s advertisements featured employers including Microsoft, Twitter, Adobe and Yahoo!, which the FTC argued gave a false impression that University of Phoenix partnered with these companies to create jobs for University of Phoenix students. The FTC also alleges that University of Phoenix further misrepresented that the school worked with Adobe, American Red Cross, Avis, AT&T, MGM, Microsoft, Newell Rubbermaid, Sodexo and Twitter to create specific courses for University of Phoenix students.
The reality – says the FTC – is University of Phoenix never partnered with these companies for jobs or coursework. Rather, the FTC says the school simply included the names in advertisements to entice prospective students to enroll at the University of Phoenix.
“The University continues to believe it has acted appropriately and has admitted no wrongdoing,” the university said. “This settlement agreement will enable the University to maintain focus on its core mission of improving the lives of students through career-relevant higher education, and to avoid any further distraction from serving students that could have resulted from protracted litigation, as well as the time and expense of the litigation itself.”
Who Gets The Money
Here’s where the money goes:
- FTC receives $50 million
- Former University of Phoenix students who were targeted and subsequently enrolled at the university (from October 1, 2012 to December 31, 2016) collectively will have $141 million of student loans forgiven.
The University of Phoenix is also contacting Equifax and Experian, two credit reporting agencies, to remove the debt obligations from the credit reports of former students who were impacted.
How To Get Relief
Students impacted by this settlement do not need to do anything to obtain relief. The University of Phoenix will contact those students directly.
However, affected students with debt relief eligibility questions can contact the University of Phoenix at [email protected] or 1-800-333-5305.
Even if you haven’t been impacted by this settlement, you can still take these proactive steps for your student loans:
1. Lower Payments: Consider income-driven repayment plans for your federal student loans. Your student loan payment is based on 10 – 15% of your discretionary income, family size and state of residence. While your payment is lowered, interest still accrues on your student loans so your balance can increase. After 20 to 25 years of student loan payments, you can receive student loan forgiveness on your remaining balance. Beware, however, that the amount of student loan forgiveness is considered income and subject to income tax.
2. File A Complaint. If you believe you have been misled about your student loans, you can file a consumer complaint with the FTC online or by calling 1-877-FTC-HELP (382-4357).
3. Use A Student Loan Calculator. Student loan calculators can help you save time and money – and most importantly – understand your full financial picture. Student loan calculators can calculate your monthly payment, amount of student loan forgiveness and even help you choose a repayment plan. This student loan refinancing calculator shows you how much money you can save when you refinance student loans.
4. Lower Your Interest Rate. You can lower your interest rate when you refinance student loans with a private lender. Student loan refinance rates are now ridiculously cheap and start at 1.9%. There are many ways to save thousands of dollars in interest and lower your student loan interest rate. The best time to refinance student loans is whenever you can get a lower interest rate than your current interest rate. There are no fees to apply and no prepayment penalties so you can pay off student loans faster. You can also keep refinancing as often as you like, so long as you can get a lower interest rate.