The U.S. Department of Defense has suspended the University of Phoenix's participation in the federal tuition-assistance program for members of the U.S. military, the for-profit chain's holding company disclosed in a corporate filing. A Defense Department website said the University of Phoenix is on probation.
The sanction appears to be related to allegations about the for-profit chain paying for preferential recruiting access to veterans and service members. The nonprofit Center for Investigative Reporting published an article in July asserting that Phoenix has paid the U.S. military $250,000 over the last three years to sponsor 89 recruiting events, including concerts, a chocolate festival and a fashion show. The center also reported that Phoenix produced a commemorative coin, which it distributed on military bases, that included the Defense Department's seal.
The Defense Department's inquiry also cited investigations of Phoenix by the U.S. Federal Trade Commission and California's attorney general. Those investigations, both of which revolve around student recruiting and marketing, are still ongoing.
Apollo Education Group, which owns Phoenix, said it had fixed its military student-recruiting compliance issues and that the Defense Department had acknowledged that corrective action.
“The university intends to continue its cooperation with federal and state agencies to respond to their requests. We will continue to hold ourselves to the highest standards of accountability, transparency, ethics and compliance," Timothy Slottow, Phoenix's president, said in a written statement. "The Department of Defense in its letter acknowledged the corrective actions taken by the university to date. University representatives had been working closely with DoD leaders and we all expected a different response from DoD.
"It is troubling that the DoD has used requests for information from other governmental agencies as grounds for placing the university’s DoD MOU in a probationary status. At this time, the university will not accept new students who wish to use Tuition Assistance Program funds.”
Roughly 4,000 Phoenix students receive military tuition assistance, Apollo said, accounting for about 1 percent of the university's revenue.
Senator Dick Durbin, the Illinois Democrat, praised the Defense Department's decision to put Phoenix on probation, which he said would prevent the university from enrolling new service members under the tuition-assistance program. Durbin called for an investigation of the university based on the center's reporting. “This is a decisive action by the Department of Defense to protect service members and taxpayers from a company that offers degrees of questionable value,” he said in a written statement.
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