University of Phoenix Under Investigation Over Marketing, Recruitment

The University of Phoenix is under investigation by the Federal Trade Commission for deceptive advertising practices aimed at prospective students. The school’s parent company, the Apollo Education Group (which also includes Western International University, Carnegie Learning, and the College for Financial Planning) is cooperating fully, and will be handing over documents dating back to January 2011 dealing with marketing, tuition, military recruitment, and more.

According to the Civil Investigative Demand filing from the Federal Trade Commission:

The demand indicates that it relates to an investigation to determine if certain unnamed persons, partnerships, corporations, or others have engaged or are engaging in 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 education accreditation products or services.

According to Blake Neff of the Daily Caller, the University of Phoenix has experienced declining enrollment, falling from 400,000 students to 200,000 in five years and closing more than 100 campuses.

CEO of Apollo Group Greg Cappelli says that the decline is a result of less marketing expenditure and other “transitions” the college is undergoing. He was quoted by Ashlee Kieler of Consumerist about his optimism for the future:

University of Phoenix is going through a transition, but we’re building a stronger foundation for future success. We’re working to build a much more competitive and efficient university for the long term.

The Apollo Group has also paid multiple settlements to avoid litigation. The Department of Education received $10 million to settle their claim that its recruiters enrolled underqualified students. In 2009, Apollo disbursed $78 million in response to accusations that they illegally paid recruiters based on the number of students they enrolled.

Recently, the company has come under fire for becoming inappropriately close with the military in an effort to attract veterans. Apollo Group is the largest recipient of federal student aid for veterans, collecting over $488 million in tuition and other fees from veterans since 2009, and it often sponsors military education and employment events.

Complaints about the marketing practices of for-profit colleges are common. A variety of schools have been accused of misrepresenting graduation rates, job prospects, and other important information during the recruitment process.

The Corinthian College chain met its demise earlier this year for deceptive advertising. In May of this year, the Security and Exchange Commission also charged ITT Educational Services with fraud. This July, the Department of Education put into action its “gainful employment” rule, writes Associated Press, which mean if a college’s graduates’ loan repayments exceed 20% of their discretionary income or 8% of their total earnings, the college risks losing its federal financial aid.

For-profit colleges have responded to this crackdown saying that the scrutiny is unfair and that for-profit schools have allowed more communities to access higher education.