PXED Throws US Department of Education Under the Bus Regarding Enrollment Fraud

[Editor's note: The Higher Education Inquirer has requested all Department of Education correspondence related to "unusual" or "suspicious" enrollment regarding the University of Phoenix.]   

Phoenix Education Partners (PXED), parent company of the University of Phoenix, used its latest earnings call to advance a familiar narrative: when things go wrong, blame the U.S. Department of Education. This time, CEO Chris Lynne positioned ED as the primary culprit behind the suspicious-enrollment surge that distorted PXED’s numbers over the past year.

The exchange began when Goldman Sachs analyst George Tong asked the question PXED tried to sidestep throughout its IPO process: How much of PXED’s slowing FY2026 enrollment growth is due to fraud controls, and how much of it is due to friction created for legitimate students? And, crucially, what prevents these distortions from resurfacing in the next cycle?

Lynne offered no numbers. Instead, he pivoted to a sweeping explanation of PXED’s “advanced algorithms” and internal control systems—systems so forceful that they immediately block applicants once certain thresholds are hit, even when PXED cannot determine whether they’ve flagged a real student or a bad actor.

But once the CEO finished describing these internal measures, he returned to the real point he wanted to deliver to Wall Street: this is the Department of Education’s fault, not PXED’s.

According to Lynne, the “root” cause was a breakdown in ED’s identity-verification controls tied to the troubled rollout of the new FAFSA. The Department “publicly acknowledged” the failure, Lynne said, and PXED executives met with ED in September to confirm that the government finally has “a good handle on this.” In Lynne’s telling, PXED is the responsible party cleaning up a federal mess.

What this framing ignores is everything that came before. PXED and its predecessor, the University of Phoenix, have long histories of enrollment-integrity problems that predate the FAFSA meltdown by more than a decade. When Lynne says his algorithms “cleaned up” the funnel after being moved to the top of the application process, what he really means is that PXED used its own filters—its own black-box controls—to decide which students were worth staff time and which were not.

And PXED quietly admitted the cost. The verification loops and algorithmic filters caught many real students, blocking or delaying their enrollment and layering additional obstacles onto people who already face the steepest barriers in higher education. Lynne dismissed this as mere “friction”—a small price to pay for cleaner numbers.

But the larger problem is structural. For-profit systems built on volume rely on conversions, throughput, and funnel efficiency. When that model is threatened, the instinct is not to repair student-facing systems—it's to blame the government, tighten internal controls, and preserve the revenue pipeline. PXED’s decision to throw ED under the bus fits that pattern exactly.

The real story isn’t that the Department of Education made serious mistakes in rolling out the new FAFSA—mistakes it has acknowledged. The real story is how quickly companies like PXED use those failures as a shield, deflecting accountability for their own long-standing recruitment practices and quietly punishing the very students they claim to serve.

Phoenix Education Partners, FAFSA Fraud, and the Familiar Dance of Blame

When Phoenix Education Partners (PXED) CEO Chris Lynne publicly blamed the U.S. Department of Education for missing fraud in FAFSA applications—fraud that allowed the University of Phoenix to enroll individuals engaged in financial-aid misconduct—he likely hoped to redirect scrutiny away from his own shop. Instead, the maneuver sent up a flare. For many observers of the for-profit college sector, it felt like the return of a well-worn tactic: deflect, distract, and deny responsibility until the heat dies down.

The pivot toward blaming the Department of Education does not merely look defensive; it echoes a pattern that helped bring down an entire generation of predatory schools. And it raises a simple question: why is PXED responding like institutions that have something to hide?


The Old Script, Updated

The University of Phoenix, under PXED’s ownership, carries not just a long memory of investigations and settlements but a structural DNA shaped by years of aggressive enrollment management, marketing overreach, and high-pressure tactics. When the industry was confronted with evidence of systemic abuses—lying about job placement, enrolling ineligible students, manipulating financial-aid rules—the typical industry defense was to claim that problems were caused by bad actors, by misinterpreted regulations, or by a sluggish and incompetent Department of Education.

Those excuses were not convincing then, and they ring even more hollow now.

If individuals involved in financial-aid fraud managed to slip into the system, an institution with PXED’s history should be the first to strengthen internal controls, not pass the buck. Schools are required under federal law to verify eligibility, prevent fraud, and monitor suspicious patterns. Pretending that ED is solely responsible ignores the compliance structure PXED is obligated—by statute—to maintain.

Why Blame-Shifting Looks So Suspicious

Instead of demonstrating transparency or releasing information about internal controls that failed, PXED’s leadership has opted for a public relations gambit: blame the regulator. This raises several concerns.

First, shifting responsibility before releasing evidence suggests that PXED may be more focused on reputational management than on institutional accountability. If the organization’s processes were sound, those facts would speak louder—and more credibly—than an accusatory press statement.

Second, the posture is déjà vu for people who have tracked the sector for decades. Corinthian Colleges, ITT Tech, Education Management Corp., and Career Education Corporation all blamed ED at various stages of their collapses. In each case, deflection became part of the pattern that preceded deeper revelations of systemic abuse.

When PXED’s CEO adopts similar rhetoric, observers reasonably wonder whether history is repeating itself—again.

Finally, PXED’s argument undermines trust at a moment when the University of Phoenix is already under skepticism from accreditors, policymakers, student-borrower advocates, and the public. Instead of strengthening compliance, PXED’s messaging signals defensiveness. Institutions with nothing to hide usually take a different approach.

The Structural Issues PXED Doesn’t Want to Discuss

PXED acquired the University of Phoenix with promises of modernization, stabilization, and responsible stewardship. But beneath the marketing, core challenges remain:

A business model dependent on federal aid. The more a school relies on federal dollars, the stronger its responsibility to prevent fraud—not the weaker.

A compliance culture shaped by profit pressure. For-profit education has repeatedly shown how financial incentives can distort admissions and oversight.

A credibility deficit. PXED took over an institution known internationally for deceptive advertising and financial-aid abuses. Blaming ED only magnifies the perception that nothing has fundamentally changed.

A fragile regulatory environment. With oversight tightening and student-protection rules returning, PXED cannot afford to gesture toward the old for-profit playbook. Doing so suggests they are trying to manage optics instead of outcomes.

What Accountability Would Look Like

If PXED wanted to demonstrate leadership rather than defensiveness, a different response was available:

• Conduct and publish a full internal review of financial-aid intake processes
• Outline steps to prevent enrollment of fraudulent actors
• Acknowledge institutional lapses—and explain how they occurred
• Invite independent audits rather than blaming federal partners
• Demonstrate an understanding of fiduciary obligations to students and taxpayers

This is the standard expected of Title IV institutions. It is also the standard PXED insists they meet.

A Familiar Pattern at a Familiar Institution

Every moment of pressure reveals something about institutional culture. PXED’s choice to immediately fault the Department of Education—without presenting evidence of its own vigilance—suggests that the company may still be operating according to the old Phoenix playbook: when in doubt, blame someone else.

But in 2025, the public, regulators, and students have seen this movie before. And they know how it ends.

Sources
U.S. Department of Education, Federal Student Aid Handbook
Senate HELP Committee, For-Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success
Federal Trade Commission, University of Phoenix Settlement Documents
U.S. Department of Education, Program Review and Compliance Requirements
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