Continuing Education, For-Profit, Friend, Fraud, or Fishy, Recruitment, University & College - Written by on Thursday, June 16, 2011 13:14 - 1 Comment

University of Phoenix Settles Suit Over Recruitment Practices

Here’s a story from ProPublica, a non-profit journalism organization that investigates suspicious activity. ProPublica staff writer Sharona Coutts wrote numerous stories on for-profit education in recent years. We are sharing some of the must reads for you here.

In this story, Coutts reports that University of Phoenix has agreed to pay the U.S. government $67.5 million to settle a suit regarding the way it compensates recruiters.

courthouse interior

Photo by JoelK75 on Flickr.
Story by Sharona Coutts for Propublica.

The University of Phoenix, the nation’s largest for-profit school, has agreed to pay the U.S. government $67.5 million to settle allegations concerning its compensation policies for recruiters.

The agreement wrapped up a dispute that began in 2003, when two former employees filed suit in the Eastern District of California, claiming the school illegally pressured enrollment officers and paid them largely according to how many students they signed up.

In a statement issued Monday, the university’s parent company, Apollo Group Inc., emphasized that the settlement did not acknowledge any wrongdoing or include an admission of liability. The company said that, under the terms of the deal, it has been released from further criminal or civil exposure related to the specified conduct. Under a separate agreement, Apollo will pay the plaintiffs $11 million for attorneys’ fees.

Last month, we reported on ongoing issues with enrollment practices at Phoenix, which has more than 440,000 students and is the country’s single biggest recipient of federal student aid. Last year, the company received about $3.2 billion in public money, accounting for 86 percent of its revenue, its financial filings show.

Students told us that Phoenix counselors used a variety of questionable tactics to reel them in, from pretending to befriend them to misleading them about the transferability of credits. Former recruiters said they were instructed to suggest that federal grants would cover students’ costs, when that was uncertain. Phoenix’s president, Bill Pepicello, responded that the university did not train recruiters to use such approaches and did not condone them.

Apollo Group previously paid out $10 million to resolve allegations of enrollment abuses made in 2004 by the U.S. Department of Education.

The new settlement “underscores the importance of protecting students from overzealous recruitment efforts,” Arne Duncan, the U.S. secretary of education, said in an e-mailed statement. “Saddling students with debt they cannot afford is not a good outcome.”

Apollo had reported in a regulatory filing that it had put aside about $80 million to cover the resolution of the whistleblower lawsuit. After the company announced the agreement Monday, its shares rose more than 9 percent to close at $62.06.

 



1 Comment

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Counting Down 2011: Top Trends in Online Education - Online College Courses
Jan 13, 2012 7:47

[...] another related development, a June news report indicated that the University of Phoenix settled a lawsuit ($67.5 million) with the U.S. government [...]

Leave a Reply

Comment

Campus Buzz


We welcome Tips & Pitches



What you need to know weekly:
The WiredAcademic newsletter.


* = required field

Latest WA Original Features






  • Twitter feed loading




Paul Glader, Managing Editor
@paulglader

Eleni Glader, Policy Editor

Elbert Chu, Innovation Editor
@elbertchu

Ravi Kumar, Reporter & Social Media Editor
@ravinepal

Derek Reed, Reporter
@derekreed

Brock Buesing, Contributor










APEI23.55  chart+0.25  chart +1.07%
APOL9.995  chart+0.000  chart +0.00%
AAPL150.987  chart-0.033  chart -0.02%
BPI13.73  chart-0.06  chart -0.44%
CAST0.0025  chart+0.0000  chart +0.00%
CECO9.35  chart+0.03  chart +0.32%
COCO0.0139  chart+0.0000  chart +0.00%
CPLA87.50  chart-0.90  chart -1.02%
DV36.90  chart-0.05  chart -0.14%
EDMC0.007  chart+0.000  chart +0.00%
ESI0.358  chart+0.000  chart +0.00%
GOOG970.01  chart-0.88  chart -0.09%
LINC3.19  chart-0.07  chart -2.15%
LOPE77.21  chart-0.11  chart -0.14%
PEDH0.142  chart+0.000  chart +0.00%
PSO8.31  chart+0.01  chart +0.12%
SABA8.81  chart+0.00  chart +0.00%
SCHL43.89  chart-0.64  chart -1.44%
STRA93.98  chart-0.16  chart -0.17%
WPON/A  chart+0  chartN/A
2017-07-20 12:12


Cost of Education, Domestic, Education Quality, Ethics, For-Profit, Regulatory, Required, Students, University & College - Mar 11, 2012 21:17 - 0 Comments

Heard: Senators On Warpath Against For-Profit College Military Push

More In For-Profit


Blended Learning, Domestic, Elementary / Primary / Junior, Flipped Classrooms, High school / Secondary 2, International, Open Source Education, Required, School teachers, Startups, Students, Technology - Mar 12, 2012 19:04 - 0 Comments

Big Weekend For Sal Khan; Appears On 60 Minutes & Launches Free iPad App

More In Technology


Domestic, Education Quality, For-Profit, Friend, Fraud, or Fishy, Required, University & College - Feb 10, 2012 16:36 - 0 Comments

Heard: NYC Warns Against For-Profit Adult Education Scams

More In Friend, Fraud, or Fishy