University of Phoenix Settles Fraud Complaint for $78.5 Million

By Henry W You’ve seen their commercials all over the web and on television.  The website has page after page of complaints from  students detailing their history of abuse...

By Henry W

You’ve seen their commercials all over the web and on television.  The website has page after page of complaints from  students detailing their history of abuse and exploitation at the hands of University of Phoenix and its parent company–The Apollo Group.  It also has, on the very same page–a google advertisement from University of Phoenix.

I want these peoples’ voices to be heard as a warning to potential victims of the University of Phoenix, and as a call to action to inform taxpayers that the Apollo Group has been defrauding the taxpayer — targeting and recruiting veterans and others based on their eligibility for federal benefits.  I thought about writing some snazzy words of my own about this “University”, but these are not people who are trying to be silent and why should I prattle on when they are more than ready to speak.  The best thing I can do is to give them another platform.

So here we go!

“At the end of my third class my GPA was 3.8 but I struggled with my fourth class with my new position at work in Iraq and internet issues. Furthermore, I was unbelievably tired due to early kidney cancer that was fortunately diagnosed and removed. My instructor was willing to give me an incomplete but her own academic advisor did not return her phone calls. She was under pressure to post her grades so I was given an F. My academic advisor fully advised UoP of my instructor’s willingness to give me an Incomplete and of my kidney cancer episode. UoP rejected that and said all grades are final and granting Incompletes had to occur before posting the grade. My new GPA is now under 3.0 and I am kicked out of school for six months.”


“if I had known before I started going here what I know now, I would never have signed up, the only reason I did was because my local Veterans Administration recommended it for the Voc Rehab program, and even though the VA is paying for it, I still get calls and letters from uop about outstanding balances, I can’t even get my diploma from them because they say I still owe over 2000 dollars, I would stay away from this school if anyone is thinking of going here.


“Through University of Phoenix’s actions I am unable to pay my rent and face eviction within a few days, am unable to purchase food, medication, or even pay my electric bill. I will recoup my losses, but at what price? 3 paychecks are going to just pay back the NSFs in my checking account and will be put into collections by all my other creditors. When this is all done and through I will be out almost $1000.00 and be delinquent in almost $4000.00 with my creditors. Not to mention in serious bad standing with my apartment complex.”

“The university’s mantra was “Just make the changes but oh by the way you will have to send us more money.” In frustration, I withdrew from the university after 5 years. I refuse to send them another dime. After withdrawing from the university, I received an overdue bill without any explanation. I paid off my student loan in full last year, paying for any additional classes in full yet they will not tell me why I have received this bill or the almost 600 in additional late fees. If you have suffered similar mistreatments from the University of Phoenix, please contact me. If we can work together as a group, we have a chance of getting some of our joint grievances addressed.”


“I believe that the university misrepresented itself by using a “bait and swith” tactic, luring me to register and later on telling me that I need to take extra classes. They are taking advantage of the fact that I am eager to graduate, or they even think that I am desperate. When I asked the counselor exactly how many units I need to take under the new program, she said she hasn’t evaluated my transcript, which is lame because most universities would do this prior to enrolling any student!


“When I said I wanted to withdraw out the course she told me to just stay enrolled and get a d so finiacial aid would pay them, if I did not do that then I wouldn’t get any student loans. Its been about 2 months and now i’am recieving 2,435 worth of dept from the appollo group.

I’am going to consult an attorney. I don’t think I should have to pay them the whole balance of 2 classes for 6 weeks when I tried to withdraw the second week of class. I wouldn’t recommend this University to anyone. I’am not going to let them stop me from getting my education. I’am at the local community college and will be transferring into a university next year.”


“I was former student of UOP or Appallo and I went to get a anther copy of my tarnscript for my current school I have been at for over year and they will no release my transcripts. I ask them why. They say that I owe them 2800.00 dallors. I said how could that be when you collected well over 7500.00 and I drop classes and come to find out after I withdrew they still collect money and still saying I owe them money. So I contacted a attorney they will be hearing from them.

They also sent me to collection and the school I am going to know will not grant Finical Aid untill i get those transcipts. One semister from getting my LPN.”

Last week University of Phoenix (UOP) settled a lawsuit brought by two whistle blowers assisted by the federal government.  The company settled for 78.5 million dollars, including 11 million in lawyers fees.   I was very disappointed with the meager reporting this got in the national media outlets, many of which seemed to be uninformed and unprepared to discuss the issue. The best article immediately available to me was by Lisa Krieger from the San Jose Mercury News and I have linked to it below.

The two whistle blowers in this case were two enrollment counselors at UOP.  Their complaint (link below under “”) alleges that enrollment counselors at UOP were paid and offered perks according to the number of students they enrolled in UOP.  On the surface, this doesn’t sound so sinister and this is why the press was not interested in the story.

This is only a very superficial understanding of the case!

What the whistle blowers are saying in their complaint is that they were told to completely ignore student transcripts and to simply enroll as many warm bodies as possible in UOP.  Much of the UOP’s recruiting is aimed at veterans.  On the front page of the UOP website, there is a section devoted to advertisement directed at current and former members of the US military.  Why is UOP so interested in recruiting people regardless of their academic eligibility and why are they targeting veterans and other potential recipients of federal academic aid?

The reason, as alleged in the complaint, is that University of Phoenix has received 500 million dollars annually since 1997 from the Federal Department of Education.  The way the system works now (according to page 5 of the complaint), is that UOP enrolls students who aren’t even eligible for federal aid and that these students are then later disqualified from the “University” or forced to pay for extra classes on their own.

UOP does this to Federal aid recipients because the money students receive does not go to the student, it goes directly to the “University” of Phoenix and any loans that the student takes out are owed to the federal government and not to UOP.  The money the student is eligible for in loans and benefits from Perkins and Pell grants, from FSEOG and FFELP (Federal Educational loan programs)  goes directly into the UOP coffers.  If the student is disqualified for funds later on, or if they drop out of school, they find out that they suddenly owe large sums to “The Apollo Group.”  If they default, the taxpayer absorbs the cost.

Piece these facts together with the complaints from consumers above, reader.  The theme again and again is that those who enroll are seduced by promises of a college degree, paid for largely by federal student loans.  Then they find they are on the hook for far more money than they originally wished to commit to, and that online classes are far more difficult and require far more diligence than they had thought.  Those who do graduate find that employers do not respect their online UOP degree and those who seek to transfer credits find that other institutions do not respect them either.

Its easy to blame the student for being unprepared and dropping out for their own reasons, but that is why a real educational institution would do such nutty things as looking at the students’ transcripts or even inquiring if they have graduated from high school.  A real University would check before promising its students substantial sums of money from the DOE.  A real university would care about the number of students who finish their education, but UOP cares only how many people enroll, whether they are really eligible for funds or not.  This excerpt is from page 12 of the complaint.  Counselors in the Northern California area were told to:

(a) “pull all stops and get the numbers this month, because your jobs are on the line.” (b) In individual meetings at each counselor’s office, “do whatever it takes to get the application. It’s ALL about the numbers – nothing else matters.” (“Application” is UOP code term for an enrollment). (c) their jobs were at stake, based upon their ability to increase their enrollment numbers, stating, “your jobs are on the chopping block. You’re going to be put on plan and have the possibility of getting a demotion, decrease in salary, or losing your job. You need to get the application. I don’t care what it takes. They figured out a way to lower your salary by demoting you, or they’re going to fire you.”

UOP’s corporate bosses fully realize that they are in violation of the law when they compensate counselors based on numbers of students enrolled, yet according to the complaint senior corporate leadership brag (pg. 13) about schemes used to deceive both students and federal regulators charged with reviewing UOP’s compensation practices:

As Bill Brebaugh, head of UOP Corporate Enrollment openly brags, UOP masks its illegal compensation
scheme through “smoke and mirrors” so that UOP can “fly under the radar” of the Department of
Education. (c) Mr. Brebaugh repeatedly emphasizes to the enrollment counselors: “It’s all about
the numbers. It will always be about the numbers. But we need to show the Department of Education what they want to see.”

What really bothers me is that the University of Phoenix has taken so many federal dollars and spent so many of them on television and online advertising, on  $80 million in legal costs and fines associated with this case alone, on the naming rights to the Arizona Cardinals NFL stadium –all funds that were obtained under fraudulent pretenses.  This money comes from entities within the US government that provide grants to aspiring students, but it also comes directly out of the blood, sweat, and tears of young people, veterans  and working people whose aim in the first place was only to educate themselves and better their situation.  Instead they get debt, collection calls, and black marks on their credit scores.  This is an institution that hurts people who need a break.  It’s insane that such an institution is even allowed to exist after the “settlement” this case.

The case was “settled” before the US Supreme Court could rule on it, and the company was not forced to “admit wrongdoing,” but this case sheds light on UOP’s unethical practices and the practices of  the online for-profit education industry generally.  Nevertheless, the event caused a sharp upward spike in UOP’s stock this week.  I thought the statement released by UOP was interesting.  Their statement expressed “confidence” that the company “will not face any further civil or administrative exposure.”  This illustrates the problem nicely.  Since the “school” is not focused on educating the student, but rather on improving the stock quote, the dollar will always come before the student.

But I think that the University of Phoenix, subsidiary of the Apollo Group, is wrong.  I think they still do face a very real threat of civil litigation, and that class action lawsuits (such as this one filed against UOP by actual students have substantial merit in light of the institutions’ decision to settle this case.  That’s legalese for give these people their #@(*$& money back and pay their supposed debts out of UOP profits, instead of wasting them on internet/TV ads and 8 million per year on NFL stadium naming rights.  Speaking of the people, I’d like to end this column where it began, with one of the people whose complaints inspired it:

I wouldn’t recommend this University to anyone. I’am not going to let them stop me from getting my education. I’am at the local community college and will be transferring into a university next year.”


You said a mouthful Caesar.  Alea iacta est.

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