FTC sends out nearly $50 million to former University of Phoenix students from 2019 settlement

The new FTC payments are part of a record $191 million settlement with the University of Phoenix from late 2019 over claims of deceptive marketing.

• The FTC is sending University of Phoenix students $50 million in refunds from a 2019 settlement.
• The $191 million settlement also canceled $141 million of unpaid balances owed directly to the school.
• Federal and private student loans aren't affected by the settlement, the FTC said.
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The Federal Trade Commission secured a record $191 million settlement with the for-profit University of Phoenix in 2019 over deceptive marketing claims, and announced on Wednesday that it is sending nearly $50 million in refunds to eligible students.

The FTC had sued the university for advertising partnerships with corporations including Yahoo and American Red Cross that in reality had no curricular ties to the school. The university did not acknowledge wrongdoing in the settlement, an FTC record for a for-profit educational entity.

In the Wednesday press release, the FTC said it will be sending payments to more than 147,000 students "who may have been lured by allegedly deceptive advertisements."

"The refunds stem from a lawsuit the FTC filed against UOP alleging that it used deceptive advertisements that falsely touted its relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and the American Red Cross," the press release said. "The FTC also alleged that UOP's advertising gave the false impression that the online school worked with those companies to create job opportunities for its students and tailor its curriculum for such jobs."

-FTC (@FTC) March 24, 2021

According to the press release, the FTC is issuing 146,804 checks and 677 PayPal payments to students who:

• First enrolled in the school between October 15, 2012 and December 31, 2016;
• Paid more than $5,000 with cash, grants, loans, or military benefits;
• Did not get debt cancelation in the 2019 settlement;
• And did not opt out of the university providing their contact information to the FTC.

The release added that in addition to the nearly $50 million in refunds, the $191 million settlement included $141 million to cancel unpaid balances owed directly to the school, but other debts, including federal and private student loans, are not affected by the settlement.

A University of Phoenix spokesperson told Insider that FTC's allegations were "concerning a campaign that ended in 2014 that were not tested through litigation, and do not constitute factual findings by either the FTC or any court."

"The University has admitted no wrongdoing and continues to believe it has acted appropriately," the spokesperson said. "This settlement agreement has enabled us to continue our focus on our core mission of improving the lives of our students through career-relevant higher education, and to avoid any further distraction from serving students that could have resulted from protracted litigation."

The University of Phoenix is one of many for-profit schools that have been accused of defrauding students and leaving them with student debt. Since 2015, more than 200,000 defrauded borrowers have filed for a complete discharge of their loans, and last week, President Joe Biden's Education Secretary Miguel Cardona canceled $1 billion in student loans for about 72,000 defrauded borrowers, whose claims were all pending when Biden took office.

"Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution's misconduct," Cardona said in a statement. "A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt."