University of Phoenix Enrollment Collapses 80% After Fraud Investigations - $191M FTC Settlement

The University of Phoenix’s enrollment collapsed from a peak of 470,000 students in 2010 to approximately 95,000 by fall 2018—an 80% decline—as federal and state investigations exposed systematic fraud including deceptive advertising that falsely promised job opportunities with major companies like Microsoft, Twitter, Adobe, and Yahoo. The enrollment implosion demonstrated that when for-profit colleges face regulatory scrutiny, their business models collapse because they provide minimal educational value beyond federal aid extraction.

In December 2019, the University of Phoenix agreed to pay a record $191 million to settle Federal Trade Commission charges of deceptive advertising, including $50 million in cash payments to the FTC and $141 million in debt cancellation for students who enrolled from October 2012 through end of 2016. The FTC found the university “relied on deceptive advertising to attract students,” falsely claiming partnerships with employers to create job opportunities and tailor curriculum for companies that had no such relationships with the school.

The fraud was systematic: recruiters told prospective students they could get jobs with major companies through University of Phoenix partnerships that didn’t exist, inflated job placement rates, and pressured enrollment with false promises. Students graduated with $30,000 to $100,000 in non-dischargeable debt for online degrees that many employers viewed as worthless or even as red flags. The university’s parent company, Apollo Education Group, extracted hundreds of millions in profits while loading students with taxpayer-backed loans.

The University of Phoenix case represented a different model than Corinthian or ITT Tech collapses: rather than sudden shutdown, Phoenix faced slow-motion implosion as investigations, lawsuits, and reputation damage drove enrollment decline. But the fundamental scam was identical: maximize federal aid extraction through aggressive recruitment and false promises, provide minimal educational value, trap students in non-dischargeable debt, and extract profits for executives and investors. Phoenix had also paid $67.5 million in 2009 to settle False Claims Act charges of illegal recruiting practices, showing the fraud was continuous.

The $191 million settlement was massive but represented a tiny fraction of the harm: it covered only students enrolled during a 4-year period, not the hundreds of thousands who attended during the preceding decades. Students who enrolled before October 2012 or after 2016 received nothing, and the settlement didn’t compensate for years of damaged credit, wage garnishment, or career harm from worthless degrees. Like other for-profit settlements, it allowed the institution to avoid admitting wrongdoing and continue operating—a pattern where fraud is treated as a business expense rather than grounds for shutdown. The collapse occurred during DeVos’s tenure as Education Secretary, when for-profit college oversight was weakest and borrower defense protections were frozen.