FTC Investigates U of Phoenix Parent Group

July 30, 2015

Apollo Education Group, which owns the University of Phoenix, disclosed in a corporate filing Wednesday that they received a civil investigative demand from the U.S. Federal Trade Commission.

According to the filing, that "demand" relates to an investigation to look into allegations of "deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing or sale of secondary or postsecondary educational products or services or educational accreditation products or services."

It requires Apollo to provide the federal agency with a broad range of documents and information about Phoenix, relating to the for-profit's chain's marketing, recruiting, enrollment, financial aid, tuition and fees, academic programs, academic advising, student retention, billing and debt collection, complaints, accreditations, training, military recruitment, and other matters. The request covers 2011 to the present.

Representatives from the company declined to comment and referred to the statement in the filing, saying: "Apollo is evaluating the demand and intends to cooperate fully with the FTC."

This is the most recent action taken by the agency against a for-profit institution since it charged the Georgia-based, online Ashworth College with misrepresenting the training and credentials students could earn, as well as whether credits from Ashworth would transfer to other institutions.

More than a year ago, DeVry Education Group received a similar demand from the FTC relating to the "advertising, marketing or sale of secondary or postsecondary educational products or services or educational accreditation products or services by DeVry Group during the past five years."

That investigation has been ongoing.

"The University of Phoenix investigation is important because of the national reach of the organization and because of the documents requested by the FTC," said Elizabeth Baylor, an associate director of postsecondary education at the Center for American Progress.

Those documents, including ones related to military recruitment, are important because a 2014 report from the Senate's Health, Education, Labor and Pensions -- or HELP -- committee found that Phoenix received the most GI Bill funds of any institution, totaling $750 million over four years, said Baylor, who also served as a senior investigator on the HELP committee under former Iowa Senator Tom Harkin.

Documents released by that committee after the end of its investigation into for-profit institutions also included an internal Phoenix email in which the company estimated "shockingly high" lifetime default rates for its students, Baylor said.

"This type of finding shows that the FTC plans to examine the practices of University of Phoenix might well be warranted," she said.

Phoenix has struggled in recent years as enrollment and revenue has plummeted. Most recently Apollo Group announced it was laying off approximately 600 employees, who were mostly "enrollment counselors."

Earlier this month the company announced they would revamp the admissions policy to become a more selective institution.

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