Biden Cancels $37M in Student Loans for Former University of Phoenix Students

The Department of Education says the institution misled students about their ability to get jobs at Fortune 500 companies after graduation.
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Matthew Arrojas is a news reporter at BestColleges covering higher education issues and policy. He previously worked as the hospitality and tourism news reporter at the South Florida Business Journal. He also covered higher education policy issues as...
Published on September 21, 2023
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  • An investigation found that the University of Phoenix misled students during recruitment.
  • The Department of Education will soon forgive the loans of students who were misled.
  • The move will impact approximately 1,200 former students.
  • The University of Idaho agreed to acquire the University of Phoenix soon.

More than 1,200 former University of Phoenix students will have their student loans forgiven due to allegations that the institution “misled” students about post-graduation job prospects.

The Department of Education (ED) announced Wednesday that it approved $37 million in borrower defense applications for former University of Phoenix students who attended the institution between Sept. 21, 2012, and Dec. 31, 2014. This is the latest in a series of high-profile debt forgiveness announcements that President Joe Biden has spearheaded during his time in office.

“My administration won’t stand for colleges taking advantage of hardworking students and borrowers,” Biden said in a statement. “As long as I am president, we will never stop fighting to deliver relief to borrowers who are entitled to it — like those who attended the University of Phoenix — and we will hold colleges accountable for misleading and cheating their students.”

ED stated that it has approved more than $117 billion in student loan debt discharges under the Biden administration, primarily through claims against for-profit colleges and universities.

This latest discharge is the result of what the department called misleading claims the University of Phoenix made when recruiting students between September 2012 and December 2014. ED said the institution led students to believe it had partnerships with Fortune 500 companies that would give hiring preference to University of Phoenix graduates.

These claims were not true, ED said. The institution did not have hiring agreements with the companies it listed on its website, including Microsoft, Adobe, AT&T, and the American Red Cross.

According to a Federal Trade Commission (FTC) investigation, senior leadership knew its statements were misleading. ED stated that a senior vice president at the college described one of its advertisements as “smoke and mirrors,” while another executive said its advertising campaign lacked factual support and needed improvement.

The FTC reached a $119 million settlement with the University of Phoenix in 2019.

ED said former University of Phoenix students will receive notifications in October if they were approved for federal student loan debt forgiveness. The department promised to refund all payments made on loans taken out to attend the school during the aforementioned timeline.

ED added that it intends to recoup some of the costs of these discharged loans “at a later date.”

The Biden administration has aggressively discharged federal student loan debt for former students of for-profit institutions. This latest action joins other multi-million dollar discharges from the past few years, including at:

The University of Idaho is set to merge with the University of Phoenix soon. Three Democratic Senators, however, urged the University of Idaho’s president to reconsider the purchase due to a “pattern of predatory and abusive behavior” exhibited by the University of Phoenix.