May 03, 2023

Warren, Durbin, Senators Warn the Departments of Education, Defense, and Veterans Affairs About University of Phoenix’s Predatory Practices

Senators Call on Agencies to Scrutinize For-Profit University’s Access to Federal Student Aid Programs

Text of Letter (PDF)

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Senate Majority Whip Dick Durbin (D-Il.), Richard Blumenthal (D-Conn.), Jeff Merkley (D-Ore.), Maggie Hassan (D-N.H.), and Sherrod Brown (D-Ohio) sent a letter to Secretary of Education Miguel Cardona, Secretary of Defense Lloyd Austin, and Secretary of Veterans Affairs Denis McDonough warning the agency leaders about the predatory for-profit college University of Phoenix’s (Phoenix) latest tactics to recruit students using misleading advertisements. The senators ask the agency leaders to scrutinize  Phoenix’s participation in federal student aid programs, including the Department of Education’s (ED) Title IV program, the Department of Veterans Affairs (VA) GI Bill, and the Department of Defense’s (DoD) Tuition Assistance program given the for-profit college’s history of scamming students.

“Phoenix is an unscrupulous and predatory for-profit college that has long preyed on veterans, low-income students, and students of color.  A recent report found that Phoenix has launched a national advertising campaign that has run misleading advertisements suggesting Phoenix is a public university.  These advertisements, including messages on its admissions website, tout statements such as ‘No out of state tuition’ and ‘Some state universities charge higher tuition to out-of-state students – but not University of Phoenix.’ Prospective students easily could interpret these misleading statements to mean that Phoenix is an affordable public university, when in reality it is neither,” wrote the senators. “Furthermore, Phoenix’s dismal graduation rate of 14 percent at its main and largest campus is an obvious sign that this predatory college leaves students with significant student debt and no degree to show for it.”

The senators note that Phoenix has been pushing these advertisements even after it reached a $191 million settlement with the Federal Trade Commission as a consequence for previously running false ad campaigns. Despite the settlement also including an injunction on running deceptive ads, Phoenix is continuing to peddle these misleading advertisements to entice students to enroll.

“Phoenix’s deceptive misrepresentations unfortunately are not new. In 2019, Phoenix reached a $191 million settlement with the FTC for running deceptive advertisements that gave the false impression that Phoenix partnered with major employers like the American Red Cross, AT&T, Microsoft, Twitter, and Yahoo. This was the largest financial settlement ever reached between the FTC and a for-profit college.” continued the senators.

The University of Phoenix has historically siphoned taxpayer dollars without providing attendees with a meaningful degree and the senators called on the federal agencies to scrutinize Phoenix’s access to federal student aid programs.

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

  • In February 2023, Senator Warren released a new report based on her investigation into how efforts by Republican officials and special interests to block the President’s plan to cancel up to $20,000 in federal student loan debt would affect Americans.
  • 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 and Representative Pressley visited communities across Massachusetts to celebrate the Biden administration’s student debt cancellation plan and help residents sign up for student loan relief. 
  • 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 September 2022, Senator Warren and Representative Pressley sent a letter to federal student loan servicers to inquire about the steps they are taking to ensure borrowers are receiving timely information about President Biden’s debt cancellation plan. 
  • In September 2022, Senator Warren sent a letter to the Department of Justice, urging it to issue and implement updated student debt bankruptcy guidance without delay following the Biden-Harris administration’s historic decision to cancel up to $20,000 in student debt for up to 43 million borrowers and overhaul the student loan system.
  • 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 Brown, Blumenthal, Smith, Van Hollen, Booker, Sanders, Tammy Baldwin (D-Wis.), and Markey sent a letter to the Department of Education urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default.
  • 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.