What the Pentagon Doesn’t Want You to See: For-Profit Colleges in the Military-Industrial-Education Complex

[Editor's note: The Higher Education Inquirer has emailed these FOIA documents to ProPublica and the Republic Report.  We will send these documents to any additional media and any individuals who request for the information. We are also seeking experts who can help us review and decipher the information that has been released.]   

On July 3, 2025, the Higher Education Inquirer received the latest response from the U.S. Department of Defense (DoD) regarding FOIA request 22-F-1203—our most recent effort in a nearly eight-year campaign to uncover how subprime and for-profit colleges have preyed on military servicemembers, veterans, and their families. 

The response included confirmation that 1,420 pages of documents were located. But of those, 306 pages were withheld in full, and 1,114 were released only with heavy redactions.  A few for-profit colleges—Trident University International, Grand Canyon University, DeVry University, and American Public University System (which includes American Military University and American Public University)—were specifically mentioned in the partially visible content.

 

And yet the larger truth remains hidden. The names of other institutions known to have exploited military-connected students—University of Phoenix, Colorado Technical University, American InterContinental University, Purdue University Global, and Liberty University Online, among others—were nowhere to be found in the documents we received. Their absence is conspicuous.

We have been pursuing the truth since December 2017, demanding records that would reveal how the DoD enabled these schools to thrive. We sought the list of the 50 worst-performing colleges receiving Tuition Assistance (TA) funds, based on data compiled under Executive Order 13607 during the Obama Administration. That list was never released. When the Trump Administration took power in 2017, they quietly abandoned the protective measures meant to hold these colleges accountable. Our FOIA request DOD OIG-2019-000702 was denied, with the Pentagon claiming that no such list existed. A second request in 2021 (21-F-0411) was also rejected. And now, more than three years after we filed our 2022 request, the DoD continues to deny the public full access to the truth.

The records we did receive are riddled with legal exemptions: internal deliberations, privacy claims, and most notably, references to 10 U.S.C. § 4021, a law that allows the DoD to withhold details of research transactions outside of traditional grants and contracts. In other words, the Pentagon has built legal firewalls around its relationships with for-profit education providers—and continues to shield bad actors from scrutiny.

But the complicity doesn’t end there. It extends deep into the institutional fabric of how the military interfaces with higher education.

Decades of Systemic Corruption

Since the 1980s, the U.S. Department of Defense has worked hand-in-glove with for-profit colleges through a nonprofit called the Council of College and Military Educators (CCME). What began in the 1970s as a noble initiative to expand access to education for military personnel was hijacked by predatory colleges—including the University of Phoenix—that used the organization as a lobbying front.

These schools infiltrated CCME events, using them to curry favor with military officials, often by hiring veterans as on-base sales agents and even providing alcohol to loosen up potential gatekeepers. While CCME publicly maintained the appearance of academic integrity and service, behind the scenes it served as a conduit for lobbying, influence, and enrollment schemes. Military education officers were schmoozed, manipulated, and in some cases, quietly co-opted. This is something you won’t find in CCME’s official history.

We have been told by multiple insiders that the partnership between DoD and these schools was not just tolerated but actively nurtured. Attempts at reform came and went. Investigations were buried. Promises to "do better" evaporated. No one was held accountable. No one went to jail. But the damage has been lasting—measured in ruined credit, wasted benefits, and lives derailed by fraudulent degrees and broken promises.

The Trump-Hegseth Department of Defense

And still, new scandals—except those uncovered by us—go largely unreported. The media has moved on. Congressional attention has shifted. And the same schools, or their rebranded successors, continue to operate freely, often under the protective shadow of military partnerships.

Today, the DoD continues to deny that the DODOIG-2019-000702 list of the 50 worst schools even exists. But we know otherwise. Based on VA data, whistleblower accounts, and independent reporting, we are confident that this list was compiled—and buried. The question is why. And the answer may very well lie in the unredacted names of institutions too politically connected or too legally protected to be exposed.

The Higher Education Inquirer will not stop pushing for those names, those communications, and that accountability. Because behind every redaction is a servicemember who trusted the system—and got scammed. Behind every delay is a taxpayer footing the bill for worthless credentials. Behind every refusal to act is a government too intertwined with profit to protect its own people.

This is not just a story of bureaucratic inertia. It is a story of complicity at the highest levels. And it is ongoing.

Related links:
DoD review: 0% of schools following TA rules (Military Times, 2018)
Schools are struggling to meet TA rules, but DoD isn’t punishing them. Here’s why. (Military Times, 2019)

Tracking the Elusive Truth: The Higher Education Inquirer Seeks Decades of Bankruptcy Loan Forgiveness Data

In a modest but potentially revealing inquiry, the Higher Education Inquirer has submitted a Freedom of Information Act (FOIA) request to the U.S. Department of Education asking for a count of the number of student loans discharged in bankruptcy from 1965 to 2024. The request, dated June 10, 2025, was acknowledged the same day by the Department’s FOIA Service Center under FOIA Request No. 25-03954-F.

“The Higher Education Inquirer is requesting a count of the number of student loans forgiven in bankruptcy per year from 1965 to 2024.”

It’s a simple request with profound implications. While the nation debates student loan forgiveness through executive action and legislative reforms, the forgotten path of bankruptcy discharge—once a legally viable option for debt relief—has been quietly buried over the past several decades.

A Timeline of Restriction: The Death of Bankruptcy Relief

When the Higher Education Act of 1965 established federal student loans, they were treated like other forms of consumer debt. Borrowers could, in principle, discharge them through bankruptcy just like credit card debt or medical bills.

But that began to change in the late 1970s, as concerns over potential abuse of the system gained traction in Congress. In 1976, a new law prohibited the discharge of federal student loans in bankruptcy within the first five years of repayment unless the borrower could prove “undue hardship”—a vague standard that was rarely met.

From there, the restrictions only grew tighter:

• 1990: The waiting period for dischargeability was extended to seven years.

• 1998: The option to discharge federal student loans in bankruptcy for any reason other than “undue hardship” was eliminated entirely. This meant student loan borrowers had to meet the strict and often inaccessible hardship standard at all times.

• 2005: Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), Congress extended the “undue hardship” requirement to most private student loans as well—effectively removing nearly all forms of bankruptcy relief from the table for student debtors.

These changes did not result from clear evidence of widespread abuse. Rather, they were fueled by myths of “deadbeat graduates” walking away from their obligations and by lobbying from banks, guaranty agencies, and debt collection firms that profited from non-dischargeable debt. Meanwhile, evidence of hardship among borrowers grew, especially for those who attended predatory for-profit colleges or dropped out without a degree.

The Brunner Barrier

The biggest obstacle for borrowers remains the so-called “Brunner test,” a three-prong legal standard established in a 1987 court case, Brunner v. New York State Higher Education Services Corp. It requires borrowers to prove:

1. They cannot maintain a minimal standard of living if forced to repay the loans,

2. Their financial situation is unlikely to improve, and

3. They made a good-faith effort to repay the loans.

Many judges interpreted these criteria narrowly, creating a virtually insurmountable hurdle. Borrowers with severe disabilities, advanced age, or long-term unemployment have been denied relief even when destitute.

What We Still Don’t Know

Despite these legal developments and the hardship they created, data on how many people have succeeded in discharging their student loans through bankruptcy remains remarkably scarce. Advocacy groups and journalists have long questioned why no federal agency tracks this information in a clear, public-facing format.

That’s what prompted the Higher Education Inquirer’s FOIA request—an effort to establish a factual baseline. We asked the Department of Education for an annual count of bankruptcy discharges involving student loans over a 60-year period, from 1965 to 2024.

The Bureaucratic Wall

According to the Department’s FOIA Service Center, the average processing time for such requests is currently 185 business days—about nine months. While the Department did not ask for clarification immediately, it reserves the right to do so within ten business days. Failure to respond to such a request would result in administrative closure of the FOIA—yet another form of delay that keeps the public in the dark.

This bureaucratic stonewalling is part of a larger pattern. While the Department of Education has been quick to announce student loan forgiveness programs under executive orders or settlement agreements, it remains reluctant to shine a light on longstanding failures—especially the erosion of legal remedies like bankruptcy.

A Step Toward Truth and Accountability

The public deserves a clear view of the history and consequences of stripping bankruptcy protections from student borrowers. It’s not just a legal matter—it’s a story of systemic neglect, political pressure, and financial exploitation. Without access to historical data, reform remains a guesswork operation and accountability remains elusive.

We at the Higher Education Inquirer will continue to press for answers. If and when the FOIA request is fulfilled, we will publish the data and conduct a thorough analysis, year by year. We believe that exposing the truth about student loan bankruptcy isn’t just a matter of curiosity—it’s a step toward justice.

If you have experience with student loan bankruptcy, data that could assist our investigation, or simply want to share your story, contact us at gmcghee@aya.yale.edu.

Latest Borrower Defense to Repayment Numbers (US Department of Education)

The Higher Education Inquirer has received information today from the US Department of Education about Borrower Defense to Repayment claims.  Here are the results from ED FOIA 25-02047-F.  

 

Department of Education No Longer Posting Freedom of Information Requests

The US Department of Education (ED) has stopped posting up-to-date Freedom of Information (FOIA) logs. These logs had been posted and updated from 2011 to September 2024 to improve transparency and accountability to the agency.  We have reached out ED for a statement. We are also awaiting for a number of information requests, some of which have taken more than 18 months for substantive replies. 

 

 

Higher Education Inquirer continues to follow IPO/sale of University of Phoenix

On March 6, 2025, Apollo and Vistria publicly announced a possible IPO or sale of the University of Phoenix.  These companies have been trying to sell the University of Phoenix since 2021, but there have been no takers. The owners claim the school is worth $1.5B to $1.7B, but we (and experts we know) are skeptical, given the financials we have seen so far. The University of Phoenix was previously on sale for about $500M-$700M but the University of Arkansas System, the State of Idaho, and apparently other colleges declined the offers. 

The University of Phoenix offers subprime education to folks, historically targeting servicemembers, veterans, and people of color. While some students may profit from these robocollege credentials, one wonders what these workers actually learn. The current student-teacher ratio at the University of Phoenix, according to the US Department of Education, is 132 to 1.   

The University of Phoenix has faced a number of scandals, sometimes getting away with no penalty, and other times paying large fines.  

In 2023 we made a Freedom of Action (FOIA) request to the US Department of Education (ED) to get Phoenix's most recent audited financials. In March 2025, more than 20 months later, we were provided with a 35-page report, audited by Deloitte, with numbers from 2021 and 2022. 

HEI has filed a number of FOIAs with ED and discovered that almost 1 million former University of Phoenix students owe approximately $21.6 Billion in student loan debt. In addition, about 19,000 borrowers have had their student loans forgiven as a result of the Sweet v Cardona Borrower Defense to Repayment case.  According to ED FOIA 23-02373-F, more than 73,000 have filed fraud claims against the school. 

This month the Higher Education Inquirer followed up with a Freedom of Information request with the ED to obtain more up-to-date financial numbers for the University of Phoenix. We hope they will be responsive and timely enough to get the word out to the public.   

The Future of Federal Student Loans

The U.S. student loan system, now exceeding $1.7 trillion in debt and affecting over 40 million borrowers, is facing significant challenges. As political pressures rise, the management of student loans could be significantly altered. A combination of potential privatization, the elimination of the U.S. Department of Education (ED), and a new role for the Department of the Treasury raises critical questions about the future of the system.

U.S. Department of Education: Strained Resources and Outsourcing

The U.S. Department of Education (ED) is responsible for managing federal student loan servicing, loan forgiveness programs, and borrower defense to repayment (BDR) claims. However, ED has faced ongoing issues with understaffing and inefficiency, particularly as many functions have been outsourced to contractors. Companies like Maximus (including subsidiaries like AidVantage) manage much of the administrative burden for loan servicing. This has raised concerns about accountability and the impact on borrowers, especially those seeking loan relief.

In recent years, ED has also experienced staff reductions and funding cuts, making it difficult to process claims or maintain high-quality service. The potential for further cuts or even the elimination of the department could exacerbate these problems. If ED’s role is diminished, other entities, such as the Department of the Treasury, could assume responsibility for managing the student loan portfolio, though this would present its own set of challenges.

Potential for Privatization of the Student Loan Portfolio

One of the most discussed options for addressing the student loan crisis is the privatization of the federal student loan portfolio. Under previous administration discussions, including those during President Trump’s tenure, there were talks about selling off parts of the student loan portfolio to private companies. This would be done with the aim of reducing the federal deficit.

In 2019, McKinsey & Company was hired by the Trump administration to analyze the value of the student loan portfolio, considering factors such as default rates and economic conditions. While the report's findings were never made public, the idea of transferring the loans to private companies—such as banks or investment firms—remains a possibility.

The consequences of privatizing federal student loans could be significant. Private companies would likely focus on profitability, which could result in stricter repayment terms or less flexibility for borrowers seeking loan forgiveness or other relief options. This shift may reduce borrower protections, making it harder for students to challenge repayment terms or pursue loan discharges.

The Department of the Treasury and its Potential Role

If the U.S. Department of Education is restructured or eliminated, there is a possibility that the Department of the Treasury could step in to manage some aspects of the student loan portfolio. The Treasury is responsible for the country’s financial systems and debt management, so it could, in theory, handle the federal student loan portfolio from a financial oversight perspective.

However, while the Treasury has experience in financial management, it lacks the specialized knowledge of student loans and borrower protections that the Department of Education currently provides. For example, the Treasury would need to find ways to process complex Borrower Defense to Repayment claims, a responsibility ED currently manages. In 2023, over 750,000 Borrower Defense claims were pending, with thousands of claims related to predatory practices at for-profit colleges such as University of Phoenix, ITT Tech, and Kaplan University (now known as Purdue Global). Additionally, some of these for-profit schools were able to reorganize and continue operating under different names, further complicating the situation.

The Treasury could also contract out loan servicing, but this could increase reliance on profit-driven companies, possibly compromising the interests of borrowers in favor of financial performance.

Borrower Defense Claims and the Impact of For-Profit Schools

A large portion of the Borrower Defense to Repayment claims comes from students who attended for-profit colleges with a history of deceptive practices. These institutions, often referred to as subprime colleges, misled students about job prospects, program outcomes, and accreditation, leaving many with significant student debt but poor employment outcomes.

Data from 2023 revealed that over 750,000 Borrower Defense claims were filed with the Department of Education, many of them against for-profit institutions. The Sweet v. Cardona case showed that more than 200,000 borrowers were expected to receive debt relief after years of waiting. However, the process was slow, with an estimated 16,000 new claims being filed each month, and only 35 ED workers handling these claims. These delays, combined with the uncertainty around the future of ED, leave borrowers vulnerable to prolonged financial hardship. 

Lack of Transparency and Accountability in the System

While the U.S. Department of Education tracks Borrower Defense claims, it does not publish institutional-level data, making it difficult to identify which schools are responsible for the most fraudulent activity. 

In response to this, FOIA requests have been filed by organizations like the National Student Legal Defense Network and the Higher Education Inquirer to obtain detailed information about which institutions are disproportionately affecting borrowers. 

In one such request, the Higher Education Inquirer asked for information regarding claims filed against the University of Phoenix, a school with a significant number of Borrower Defense claims.

The lack of transparency in the system makes it harder for borrowers to make informed decisions about which institutions to attend and limits accountability for schools that have harmed students. If the Treasury or private companies take over management of the loan portfolio, these transparency issues could worsen, as private entities are less likely to prioritize public accountability.

Conclusion

The future of the U.S. student loan system is uncertain, particularly as the Department of Education faces the potential of funding cuts, staff reductions, or even complete dissolution. If ED’s role diminishes or disappears, the Department of the Treasury could take over some functions, but this would raise questions about the fairness and transparency of the system.

The possibility of privatizing the student loan portfolio also looms large, which could shift the focus away from borrower protections and toward financial gain for private companies. For-profit schools, many of which have a history of predatory practices, are responsible for a disproportionate number of Borrower Defense claims, and any move to privatize the loan portfolio could exacerbate the challenges faced by borrowers seeking relief from these institutions.

Ultimately, there is a need for greater transparency and accountability in how the student loan system operates. Whether managed by the Department of Education, the Treasury, or private companies, protecting borrowers and ensuring fairness should remain central to any future reforms. If these issues are not addressed, millions of borrowers will continue to face significant financial hardship.

Rep. Scholten, Oversight Dems Introduce Bill to Hold Musk, DOGE Accountable to the American Taxpayer

(Press Release)

Today, U.S. Congresswoman Hillary Scholten (MI03) introduced the Consistent Legal Expectations and Access to Records (CLEAR) Act, which clarifies that temporary organizations created under 5 USC 3161, like DOGE, are subject to FOIA. Given the breadth of power these organizations wield, they should be subject to the same standard of scrutiny and public information sharing that other agencies are beholden to. 

As it currently stands, DOGE does not need to comply with FOIA requests from the American public. Scholten is joined by House Committee on Oversight and Reform Ranking Member Gerry Connolly (VA11), Dave Min (CA47), and Kweisi Mfume (MD07) as co-leads on her legislation.

“In the first two weeks of Trump’s second term, chaos has reigned and has many asking… what is happening? An unelected businessman with numerous conflicts of interest has been given unprecedented access to government data and Americans' personal information. These are taxpayer dollars he’s controlling, and the American people deserve to know what’s happening. Knowledge is power, and in America, that power belongs to the people. My bill will make sure that no president, Republican or Democrat, can hide their actions from the American people,” said Rep. Scholten.

President Trump created DOGE through an executive order using an authority that allows the president to set up "temporary organizations." Congresswoman Scholten introduced this legislation to make it clear that any organization created this way is automatically subject to FOIA. The bill would apply retroactively, meaning all of DOGE’s records since it was formed would become public if the legislation is signed into law.

[Editor's note: The Higher Education Inquirer has requested digital copies of all emails between the White House and DOGE sent or received on February 5, 2025.] 

Our First FOIAs of 2025

The Higher Education Inquirer has started the year by digging deeper into the Federal Student Loan Portfolio using the Freedom of Information Act (FOIA) process. If you would like to know something that has not been made public by the US Department of Education (ED), please contact us. ED has a number of additional websites for public information, such as the College Scorecard, Federal Student Aid website, College Navigator, IPEDS data website, and the Closed Schools Monthly Report. But the availability of good data could be reduced in coming years. As usual, we appreciate your comments below.  

 

 

Image from US Department of Education regarding FOIA Request 25-01935-F

 

 

 

DOD Continues Protecting Bad Actor Schools that Prey Upon Military Servicemembers

The US Department of Defense (DOD) continues to stall the Higher Education Inquirer's efforts to investigate bad actor schools that prey upon servicemembers, veterans, and their families. Our effort began in December 2017 when we first asked DOD officials about oversight of its DOD Tuition Assistance Program (DOD TA). 

Our latest request was FOIA 22-1203-F and the projected response date has been moved again, to March 2025. We believe this information is important for the welfare, safety, and morale of US troops and have communicated our concern to DOD several times.  

In our latest correspondence, a DOD FOIA specialist stated that they were "working with several internal offices and external agencies in order to coordinate this response." When asked what DOD components and agencies were involved in the response, the representative said that they could not name the sources, but that a "voluminous amount of records" were located under our FOIA. 

In the meantime, DOD is handing out even more money to schools, and with limited oversight.  And President Trump's nominee for Secretary of Defense, Pete Hegseth, has been helpful to for-profit colleges. 

Pending FOIAs Regarding the University of Phoenix

The Higher Education Inquirer is awaiting five Freedom of Information Act (FOIA) responses from the US Department of Education (ED) regarding the University of Phoenix. All of these pending requests were made in 2023. 

ED has already provided important and substantial information, including an estimate of $21.6B in student loan debt by more than 900,000 University of Phoenix debtors and tens of thousands of Borrower Defense fraud claims, many that have already been settled in favor of the student debtors in Sweet et al. v Cardona. 

To any organization considering an acquisition of the school, we suggest that they read this information as part of their due diligence. 

Copies of this article have been sent to University of Idaho President C. Scott Green and Idaho Governor Brad Little. 

23-02053F

R

The Higher Education Inquirer is requesting a digital copy of the most recent Program Participation Agreement between the University of Phoenix and the US Department of Education.  This request is being made for transparency and accountability related to a proposed sale of the University of Phoenix by Apollo Global Management and Vistria Partners.  The most current potential buyer is the University of Idaho, which will create a new organization that will issue bonds.   (Date Range for Record Search: From 06/22/2016 To 06/22/2023)

23-02283-F

The Higher Education Inquirer is requesting the Fiscal Year 2022 equity value of the University of Phoenix.  The number may be rounded to the nearest ten million dollars. We would also like restricted and unrestricted cash numbers for the school if they are available.  IPEDS has the equity value numbers up to FY 2021.   (Date Range for Record Search: From 06/01/2022 To 07/16/2023)

23-02345-F

The Higher Education Inquirer is requesting a copy of the completed Pre-Acquisition Review application the University of Idaho has submitted for the acquisition of University of Phoenix.  The review was mentioned in the Idaho Statesman, by Jodi Walker, a University of Idaho spokesperson.   (Date Range for Record Search: From 05/01/2023 To 07/23/2023)

23-02537-F

The Higher Education Inquirer is requesting any and all correspondence between the US Department of Education and the University of Idaho, 43 Education, or NewU regarding a proposed purchase of the University of Phoenix. This includes any and all information about a Pre-Acquisition Review. The University of Idaho created NewU and 43 Education as an intermediary organization to shield itself from liability.   (Date Range for Record Search: From 05/11/2023 To 08/11/2023)

23-02548-F

The Higher Education Inquirer is requesting an estimate of the total number of cases and the total dollar amount of Borrower Defense to Repayment claims against the University of Phoenix that were approved in the Sweet v Cardona settlement.   (Date Range for Record Search: From 01/01/2023 To 08/14/2023)

South University's Accreditor Takes School Off Warning Status

South University has been given a clean bill of health by its regional accreditor, the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC). This week, SACS removed the school from Warning status and reaffirmed accreditation for the school for 10 years. The accreditor also requested a Monitoring Report within six (6) months.

According to a South University press release issued today: 

Dr. Steven Yoho, Chancellor of South University, expressed his pride in the university's achievement. "This renewed accreditation is a testament to the dedication and hard work of our faculty, staff, and students. It reflects our ongoing commitment to providing transformative and quality student outcomes that prepare them for success in a rapidly evolving world. We are proud to maintain the highest standards in academic quality and student support, and this accreditation reinforces our position as a leader in higher education."  

Additional Intel from HEI

South University has been profitable lately, and currently has more assets than liabilities, but it is facing a $36M balloon payment from a $50M Main Street Loan due in December 2025. Main Street Loans cannot be forgiven, and a $36M payment might be difficult to pay out so quickly. SACS is well aware of this impending payment.  Admittedly, the latest posted finances are almost two years old.  We look forward to seeing more up-to-date finances when the latest IRS 990 is posted. 

South could seek another lender to pay off the Main Street Loan. It could also renegotiate its contracts, reduce staffing, and sell off various assets to continue operating. By moving students online, South University could also reduce costs and consolidate operations. It may also be able to increase revenues through increased enrollment and grants.   

For a number of years, the US Department of Education has had South University on Heightened Cash Monitoring 1 for disbursement of federal student aid funds.

We have reached out to South University for comment, but have not received a response as of this publishing date.  HEI is also waiting on a Freedom of Information (FOIA) request regarding Borrower Defense to Repayment claims, which at some point the school could be liable for.  

South University currently educates about 10,000 students, with an estimated 7700 participating online. South also has ground campuses in Atlanta (GA), Virginia Beach (VA), Glen Allen (VA), Round Rock (TX), Columbia (SC), High Point (NC), Montgomery (AL), Orlando (FL), Savannah (GA), Tampa (FL), and Palm Beach (FL).  The school has been in operation since 1899. 

New Data Show Nearly a Million University of Phoenix Debtors Owe $21.6 Billion Dollars

The Higher Education Inquirer has just received a Freedom of Information Act (FOIA) response from the US Department of Education, stating that about 971,000 current student loan debtors who have attended the University of Phoenix have accumulated an estimated $21.6B in debt. The FOIA is Department of Education FOIA 23-02912-F. These debt numbers are consistent with a previous HEI analysis. 

We have been unable to learn whether this accumulated debt includes the hundreds of millions in debt that has already been forgiven--and that its present and future owners may be liable for. In 2023, we reported that approximately 73,000 debtors from the University of Phoenix had filed borrower defense fraud claims, and that more than 19,000 cases were granted immediate relief in the Sweet v Cardona settlement.

Through another FOIA request, we also discovered 6,265 consumer complaints in the Federal Trade Commission database made after its current owners took over. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims. It would appear that Phoenix has not done enough to clean up its act.  

The Higher Education Inquirer has been working for more than six years to get data about the school's noncompliance with the Department of Defense Tuition Assistance (TA) program, where servicemembers have been systematically preyed upon--and where Trump officials and their surrogates worked to cover up malfeasance by subprime schools--including the University of Phoenix. We hope to report on this topic later.  

The University of Phoenix is presently owned by Apollo Global Management and Vistria Group, who have been unsuccessfully trying to sell the school for at least three years. Previous potential suitors, held to secrecy, have included Tuskegee University, UMass Global, and the University of Arkansas System. 

Apollo Global Management is currently negotiating with the State of Idaho, which would incur $685M in debt to acquire the school. State officials are wary of the deal, and those with strong principles are unlikely to approve. But it's possible that other politicians may change their minds: if they or their families are properly compensated, directly or indirectly, for taking the risks to their reputations and careers. 

Related links:

ED Completes Pre-Acquisition Review for University of Phoenix Deal. University of Idaho Continues Hiding Details of Transaction Fees, 43 Education "High-Risk" Bonds.

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

Fraud Claims Against University of Phoenix Continue to Mount

University of Phoenix articles 

Borrower Defense articles

University of Phoenix and the Ash Heap of Higher Ed History

 (Updated September 14, 2023)

The University of Phoenix (or at least its name) may soon enter the ash heap of US higher education history--and rise again as a state-run robocollege.  But it shouldn't--at least not yet. Once hailed as the leader in affordable adult education for workers entering middle management, it is a shell of its former self--in an economy less certain for workers and consumers. 

With the school's wreckage are approximately one million people buried alive in an estimated $14B-$35B in student loan debt.  

Pattern of Fraud

As of January 2023, more than 69,000 of these student loan debtors have filed Borrower Defense to Repayment fraud claims with the US Department of Education against the University of Phoenix (UoPX). Many more could file claims when they become aware of their rights to debt relief. In the partial FOIA response below, the US Department of Education reported that 69,180 Borrower Defense claims had been made against the school.

In a recent federal case, Sweet v Cardona, most if not all of the 19,860 "denied" cases were overturned in favor of the student loan debtors.  We estimate the smaller number of fraud claims alone to amount to hundreds of millions of dollars.  

Through a FOIA request, we also discovered 6,265 consumer complaints in the FTC database. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims.  Based on the consumer complaints, we have no reason to believe that Phoenix has changed its behavior as a bad actor. 

On May 3, 2023, six US Senators (Warren, Brown, Blumenthal, Durbin, Merkley, Hassan) called for the US Department of Education, Department of Veterans Affairs, and Department of Defense to investigate the University of Phoenix for launching a new program suggesting that it was a public university.  The letter stated that the school "has long preyed on veterans, low-income students, and students of color."

Wolves in Sheep's Clothing

University of Phoenix's owners could potentially be liable for refunding the US government for the fraud. But as a state-related organization, it may be more politically difficult to claw back funds, no matter how predatory the school is.  

Purdue University Global and University of Arizona Global set a precedence in state-related organizations acquiring subprime schools (Kaplan University and Ashford University) and rebranding them as something better. Whether they are better for consumers is questionable. Phoenix will have to cut costs, largely by reducing labor. Using Indian labor (like Purdue Global) and AI could be profitable strategies.  It's likely that this deal, even if profitable, will add fuel to the growing skepticism of higher education in the US. 

University of Phoenix's Finances

Apollo Global Management and Vistria Group currently own University of Phoenix but have been trying (unsuccessfully) to unload the subprime college for more than two years. Little is publicly known about the school's finances. What is known is that UoPX gets about $800M every year from the federal government, through federal student loans, Pell Grants, GI Bill funds, and DOD Tuition Assistance.

Despite this government funding, US Department of Education data show the school's equity value for the Arizona segment declined significantly, from $361M in FY 2018 to $187M in FY 2021. 

$347M of the University of Phoenix's $518M in assets are intangible assets. Intangible assets typically include intellectual property and brand reputation. The school has $348M in liabilities.  

The University of Phoenix has been reducing expenses by cutting instructional costs, from $70M in FY 2020 to $60M in FY 2021. UoPX spends about 8 percent of its revenues on instruction.

Marketing and advertising expenses are not available, but Phoenix has been visible on the Discovery Channel's Shark Week, CBS' Big Brother, and other television events. ISpot.tv reports that University of Phoenix spends millions of dollars each year on television ads.  On one ad alone, the ad spend from February 2023 to July 2023 was an estimated $3.5M. 

Attempts to Sell UoPX

There have been two known potential buyers for the University of Phoenix: the University of Arkansas System and the University of Idaho. In both cases, the owners required the potential buyers to keep the deal secret until the sale was imminent.  

Fear of the impending higher education enrollment cliff appears to be an important pitch to potential buyers. 

Arkansas, the first target, was in the process of making the deal, and it might have gone through if nit for the voice of one whistleblower and one outstanding investigative reporter, Debra Hale Shelton of the Arkansas Times.

In the case of Idaho, news of the potential deal was publicly noted just one day before the preliminary agreement was made with the Idaho Board of Education. Two other secret meetings were held before that.  

A number of journalists including Kevin Richert (Idaho EdNews), Laura Guido (The Idaho Press), Troy Oppie (Boise State Public Radio), and Noble Brigham (Idaho Statesman) have exposed some of the problems and potential problems with the deal.  In June, Idaho legislators began questioning the acquisition.  

More recently, the opinion editor at the Idaho Statesman argued that the deal may actually be worthwhile. 

Particulars about the finances are sketchy at best and misleading at worst.  The University of Phoenix is said to include $200M in cash in the deal, but they have not said how much of that sum is required by law as "restricted cash"--money the school needs if the Department of Education needs to claw back funds.  Phoenix also claims to be highly profitable, but without showing any evidence.  

What is known about the deal is that the University of Idaho will have to borrow $685M and put its (bond) credit rating at risk. The school has not identified important information how the bonds would be sold (underwriters, bond raters, date to maturity, interest rate). 

The University of Idaho has created an FAQ to answer questions about the sale, but HEI has identified a number of misleading statements about University of Phoenix's present finances (failure to report the school's equity), potential liability (cost of tens of thousands of Borrower Defense claims), and leadership (lack of background information about Chris Lynne, the President of the University of Phoenix).  These deficiencies have been reported to the University of Idaho and to the Representative Horman. 

On June 20, Idaho Attorney General Raul Labrador filed a lawsuit to halt, or at least slow down the deal. 

The University of Idaho submitted a Pre-Acquisition Review from the US Department of Education, and it may take up to three months before the application is completed. 

As of September 2023, the deal is far from done.  Since this article was first published there have been a number of developments:

On September 11,  US Senators Elizabeth Warren, Dick Durbin, and Richard Blumenthal called on University of Idaho President Green to abandon the sale.  The Senators also asked Green if he had a plan to pay for the Borrower Defense claims, noting that University of Arizona may be on the hook for thousands of claims against Ashford University (aka University of Arizona Global campus).

In November, the Joint Finance-Appropriations Committee of the Idaho Legislature is expected to discuss the issue again.

*The Higher Education Inquirer has made a FOIA request for more up-to-date numbers from the US Department of Education. We have also filed FOIA requests with the FTC. 

Related link: 

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

The Growth of "RoboColleges" and "Robostudents"

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

Higher Education FOIA Requests to US Department of Education

The Higher Education Inquirer has made a number of Freedom of Information Act (FOIA) requests to the US Department of Education.  Here's our current list.  

 

23-01436-F 

The Higher Education Inquirer is requesting copies of the current contracts between the US Department of Education and Maximus (including but not limited to subsidiaries such as AidVantage). If this is not possible we would like the reported dollar amount for each contract. This request is part of a larger effort to assess the student loan debt portfolio. (Date Range for Record Search: From 01/01/2010 To 04/03/2023)

23-01426-F  

The Higher Education Inquirer is requesting the dollar amount of student loan funds issued to for-profit colleges each year from 1972 to 2021.  We will accept interim or partial data.  (Date Range for Record Search: From 01/01/1973 To 04/03/2022)

23-01369-F  

 

The Higher Education Inquirer is requesting an estimate of the number of student loans in the student loan portfolio that originated (1) before 1978, (2) before 1983, (3) before 1988, and (4) before 1993.  This is part of a larger effort to understand the estimated $674B in unrecoverable student loan debt.   (Date Range for Record Search: From 01/01/2023 To 03/28/2023)

23-01324-F  

 

The Higher Education Inquirer is requesting a count of the number of Borrower Defense to Repayment claims against South University and the Art Institutes, in the Consumer Engagement Management System (CEMS) up to January 1, 2023.  We would also like to know if their parent company, Education Principle Foundation (EPF), is listed as the owner of both schools in the CEMS computer database.   (Date Range for Record Search: From 01/01/2023 To 03/22/2023)

23-01263-F

 

The Higher Education Inquirer is requesting a list of all the variables/categories in the Consumer Engagement Management System (CEMS).  CEMS is mentioned in FOIA 22-01683F filed by the National Student Legal Defense Network.   (Date Range for Record Search: From 01/01/2023 To 03/16/2023)

23-00865-F 

 

We are requesting an accounting of US Department of Education Borrower Defense to Repayment (BD) claims against the University of Phoenix.  Specifically, we are asking for the (1) number of BD claims, (2) the number processed, and (3) the number approved.  The date range is from February 20, 2016 to January 26, 2023. If there is a reasonable way to estimate the total dollar amount in a timely manner, we would also like that.  This request is similar to FOIA request 22-03203-F, and is a result of discovering that the University of Arkansas System has been in negotiations to acquire University of Phoenix through a nonprofit organization.   (Date Range for Record Search: From 02/20/2016 To 01/26/2023)

 

Related links:

 

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened. 

 

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers 

 

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution 

 
Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting  

 
An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)  

 

 

 

 

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

The Higher Education Inquirer has posted a number of articles about student loan debt. In 2023, the student loan mess has reached epic proportions. Not only has the US Federal Student Aid debt portfolio reached more than $1.6 Trillion, we learned that $674 Billion was estimated to be unrecoverable. 

In California, the US District Court in Sweet v Cardona agreed to a $6 Billion settlement between student debtors and the US Department of Education. 

In Texas, a group representing for-profit colleges has sued the US Department of Education for their actions in settling Borrower Defense claims. 

And across the US, about 40 million student debtors and their families are awaiting a decision from the US Supreme Court—a decision that will not likely favor the debtors.

Borrower Defense, Subprime Colleges, Subprime Programs

Borrower Defense to Repayment claims are claims by student loan debtors that their school misled them or engaged in other misconduct in violation of certain state laws. The Department of Education may discharge all or some of the student loan debt and hold the school and its owners responsible. 

As of January 2023, there are more than three quarters of a million Borrower Defense claims against schools. And each month, about 16,000 new claims are added.  Evidence from the Sweet v Cardona case revealed that only about 35 workers were responsible for processing hundreds of thousands of claims. Those claims have been disproportionately made against a number of for-profit colleges and formerly for-profit colleges, what we call “subprime colleges.”   

Some of these subprime schools have closed (Everest College, ITT Tech, and Westwood College for example), some remain in business as for-profit colleges (like University of Phoenix and Colorado Tech), some have changed names and become covert for-profit colleges or robocolleges (like Purdue University Global, University of Arizona Global Campus, and the Art Institutes), and some schools act act like subprime colleges regardless of tax status. This includes low-return on investment programs at several US robocolleges and overly expensive graduate programs offered by 2U, an online program manager for elite colleges.  

In the Sweet v Cardona case, more than 200,000 student borrowers are expecting to receive full debt relief after years of struggling.  A Facebook group Borrower Defense-Sweet vs. Cardona currently has more than 14,000 members. 

Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v Cardona (Image credit: Ashley Pizzuti)

Transparency and Accountability 

The US Department of Education keeps an accounting of Borrower Defense claims, but only publishes the aggregate numbers, not institutional numbers. Those institutional numbers do make a difference in promoting transparency and accountability for the largest bad actors. So why does the Department of Education not publish those institutional numbers?

 
The National Student Legal Defense Network submitted a FOIA (22-01683F) to the US Department of Education (ED) in January 2022 asking just for that information. And what HEI has discovered is that just a small number of schools garnered the lion's share of the Borrower Defense claims. To get a digital copy of that information, please email us for a free download.

Related links:

Borrower Defense-Sweet vs Cardona (Facebook private group)  

Project on Predatory Student Lending

Sweet v. Cardona Victory (Matter of Life and Debt podcast)

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)

People's Rally for Student Debt Cancellation to be held outside Supreme Court, February 28, 2023

 
A Letter to the US Department of Education and Student Loan Servicers on Behalf of Student X (Heidi Weber)  

The Growth of "RoboColleges" and "Robostudents"

Subprime College Crash Continues Under the Radar

2U Virus Expands College Meltdown to Elite Universities

Maximus, Student Loan Debt, and the Poverty Industrial Complex

 
More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution