September 11, 2023

Senators Warren, Durbin, Blumenthal Warn Against Purchase of Predatory For-Profit College University of Phoenix

“We are aware that faculty and staff are concerned that UI’s purchase of Phoenix could harm its quality and reputation. We share these concerns.”

Text of Letter (PDF) 

Washington, D.C.  – United States Senator Elizabeth Warren (D-Mass.), joined U.S. Senate Majority Whip Dick Durbin (D-IL) and Richard Blumenthal (D-CT), to send a letter to the President of the University of Idaho (UI) that probes UI over how it plans to address the concerns and liabilities that come with its decision to acquire the University of Phoenix (Phoenix), a nefarious for-profit college with a history of preying on veterans, low-income students, and students of color.  

“Given Phoenix’s long record of poor student outcomes, deception of veterans, and entanglements in federal investigations and enforcement actions, we urge you to reconsider the implications of acquiring Phoenix, which could cause great harm to students and taxpayers not only in Idaho but also across the country,” wrote the lawmakers.

In the letter, the lawmakers highlighted a number of Phoenix’s predatory practices, including illegal recruiting of military service members, misleading advertisements, and hiring executives who led other defunct for-profit colleges. The lawmakers also warned UI that Phoenix could use the acquisition as a way to pass Phoenix’s liability for its wrongdoings to UI, leaving UI financially responsible for borrower defense discharge payments to students wronged by Phoenix. 

“We are aware that faculty and staff are concerned that UI’s purchase of Phoenix could harm its quality and reputation,” wrote the lawmakers. “We share these concerns.  Furthermore, we are concerned that UI’s acquisition will allow Phoenix to continue to abuse students under the guise of a trusted, public university,” the Senators wrote.  “What is UI’s plan to improve outcomes for Phoenix’s students, and to address the seven programs at Phoenix that currently are failing the gainful employment rule?”

The lawmakers also noted that as this acquisition moves forward, Phoenix could irrevocably harm UI’s reputation as a quality college due to Phoenix’s record of poor student outcomes, including low graduation rates, low earnings rates for Phoenix graduates, and multiple programs that are failing the gainful employment rule. 

The Senators urged UI to consider the financial risk of having to pay thousands of pending borrower defense claims on behalf of Phoenix if the claims are approved and warned UI about the potential risk of being liable for Phoenix’s violation of a previous agreement with the Federal Trade Commission (FTC). 

Senator Warren has led extensive oversight of for-profit colleges and protections for students who were cheated or misled: 

  • In February 2023, Senator Warren and Representative Ayanna Pressley (D-Mass.) sent a letter urging the Department of Education to protect students and alumni defrauded by Bay State College, a Massachusetts-based for-profit institution, following the college's pending loss of accreditation due to financial and organizational mismanagement.
  • In October 2022, Senator Warren called on the Department of Education to hold for-profit colleges executives accountable for scamming students out of a quality education and loading them up with student debt.
  • In August 2022, Senator Warren recognized the Department of Education for protecting students and taxpayers by taking action to revoke ACICS status as an accreditor.
  • Senator Warren, Durbin, Brown and Representatives Pramila Jaypal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona, urging the Department of Education (ED) to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College. 
  • Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Jayapal, Pressley, Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
  • Senator Warren, along with Senate Majority Leader Schumer and Representative Pressley released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
  • Senator Warren, along with Senators Van Hollen, Blumenthal, and Smith sent letters to four federal loan servicers, requesting information on their plans to support borrowers when student loan payments resume. 
  • Senator Warren, along with Senators Brown, Blumenthal, Smith, and Van Hollen sent a letter to Maximus, the company that is assuming Navient’s federal student loans servicing contract, questioning its troubling history and seeking assurances that borrowers will receive appropriate services and protections during the transition. 
  • Senator Warren, along with Senators Van Hollen, Blumenthal, Brown, Smith, Markey, and Robert Menendez (D-N.J.) sent letters to the heads of Pennsylvania Higher Education Assistance Agency, Granite State, and Navient calling on them to correct past errors with borrowers’ accounts and address growing concerns over their preparedness to transfer millions of borrowers to new servicers. 
  • Senator Warren, along with Senator Markey and Representative Pressley, released a report that detailed the ongoing failures of the Public Service Loan Forgiveness program for public servants in Massachusetts. 
  • At a hearing in July 2021, Senator Warren pushed for borrower protections after a major student loan servicing shakeup.
  • In July 2021, Senator Warren released a statement regarding the end of the Pennsylvania Higher Education Assistance Agency's (PHEAA) contract servicing student loans with the Department of Education.
  • In June 24, 2021, Senators Warren and John Kennedy (R-La.) called on PHEAA CEO to address concerns about false and misleading statements made during a subcommittee hearing on student loans, which was chaired by Senator Warren. 
  • In May 2021, Senator Warren led her colleagues in sending a letter requesting information about the steps the Department of Education and the Office of Federal Student Aid (FSA) are taking to help transition millions of federal student loan borrowers back into repayment ahead of the scheduled end to the pause on student loan payments and interest in September.
  • In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.
  • In April 2021, at her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren called out PHEAA for its mismanagement of the Public Student Loan Forgiveness Program.
  • In April 2021, Senator Warren also questioned Jack Remondi, CEO of Navient, on the company's long history of abusive and misleading behavior towards borrowers and their profiting off the broken student loan system.
  • In March 2021, Senators Warren and Menendez applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan. 
  • In December 2020, Senator Warren introduced the Consumer Bankruptcy Reform Act and in 2019, co-led the Student Borrower Bankruptcy Relief Act with Senator Durbin to make student loans dischargeable through bankruptcy.