The news about the long-awaited Phoenix University lawsuit settlement created huge excitement. The monetary settlement was the highest amount ever requested in a case involving the Federal Trade Commission against a for-profit school. The investigation process was complex and demanded the reveal of many debatable features. However, finally, the parties settled while admitting no wrongdoing. The University of Phoenix settlement has specific eligibility requirements. It brought huge benefits -$141 million debt forgiveness and $50 million cash refunds, but not every debtor qualify for this opportunity.
This complete guide will discuss the investigation from start to end and present the eligibility criteria. If you do not qualify for this chance, be positive as we will present you with many different options to reduce or eliminate the debt.
What is FTC?
The Federal Trade Commission was established in 1914, and since then, it aims to protect consumers while promoting competition. The commission achieves these goals by enforcing laws against businesses engaging in deceptive practices and educating consumers about scams or frauds.
How the Investigation Started?
The University of Phoenix settlement was the result of the long-lasting investigations. In 2015, Apollo Education Group -the university’s parent company announced that the FTC started an investigation against them. In the investigative demand sent to the parent company, the FTC notified them about their request to look into the several allegations. Such allegations were in the context of deceptive acts that could have affected educational products or accreditation advertising. Therefore, Apollo Education Group was obliged to provide the necessary documents and data about Phoenix University’s practices in enrollment, financial aid, tuition fees, debt collection, military recruitment, etc. The FTC wanted to investigate the period from 2011 till the time of the start of the investigation.
The associate director of the Center for American Progress mentioned that these documents, especially the ones about military recruitment, had utmost importance because Phoenix University was the top recipient of GI Bill funds- more than $750 million. Another factor that made the investigation significant was the shockingly high default rates.
Advertising Strategy of Phoenix University
Though the investigation that led to the University of Phoenix settlement started in 2011, it only became a center of media attention during 2012-2014.
One of the biggest issues was the ad called “the Parking Lot.” It implied that Phoenix University was collaborating with popular companies such as Microsoft or Adobe to create options for the students. Besides, it was mentioned that the university shapes the curriculum based on the learnings from the companies. Such an approach, allegedly, ensured that the graduates would be perfect fits for these organizations.
Next, the university launched other ads on TV, which presented former students together with employers’ logos. Such an ad implied that the several alumnae of Phoenix University had great positions in huge companies like Yahoo!.
In a radio commercial, as a part of the same marketing campaign called “Let’s Get to Work,” the narrator mentioned that the university creates opportunities for the students by connecting huge employers like AT&T, which are interested in Phoenix graduates. Another radio ad claimed that the university was partnering with major employers to shape the curriculum. In this way, people get skills that the employers need, or in other words, the school prepares students for their future jobs.
Allegedly, the university was also giving talking points to enrollment staff. They should have conveyed the university’s messages in their discussions with the potential students to convince them to enroll. One of such talking points mentioned that the students have access to fantastic competitive advantage as it was visible by the alumni hired by industry giants. Another point marked that the students could enjoy exclusive connections provided only to Phoenix University graduates. It was claimed that enrollment advisors convinced the potential students by mentioning that huge companies hire these people because of their education in Phoenix as the companies prefer this school over others.
Why were These Strategies Problematic?
Most students choose higher education and hence, huge education debt, hoping to get decent jobs after graduation. In the advertising, the university claimed that the graduates had great opportunities, as they partnered with the employers to shape curriculum or hire the students. Therefore, many potential students preferred Phoenix University with the hope of a bright future. If an institution makes such claims, they should be accurate. As mentioned before, the Federal Trade Commission protects consumer rights and ensures consumers are not deceived. When there exists even a tiny doubt about the claims, the FTC steps in the game. For this reason, it should come as no surprise that one of the main causes of the Phoenix University lawsuit was, allegedly, misleading ads.
What were the Claims of the FTC?
In the University of Phoenix lawsuit, the Federal Trade Commission claimed that the companies mentioned in “the Parking Lot” TV ad had no special connections with the university. According to the FTC, these major employers were not creating opportunities specifically for the Phoenix University students. However, it should also be noted that the relation between the university and companies was that the school provided tuition discounts for the employees of these organizations. Another claim by the FTC that led to the University of Phoenix settlement was that the people shown in the ad, together with company logos, worked in those companies even before getting an education in the university. Allegedly, the mentioned special opportunities were open to anyone. Lastly, there was no proof for partnering with companies about curriculum, according to the FTC.
University of Phoenix Settlement
In 2019, the University of Phoenix lawsuit settlement brought $191 million benefits to debtors. Out of this money, $141 million was loan forgiveness, while the rest, $50 million, was in the form of consumer refunds. This huge settlement amount is the highest in the case of FTC against a for-profit school. Besides monetary settlement, the defendants should ask the credit rating agencies to delete any record about Phoenix University debt from the consumer reports. It means the credit scores of the lenders could increase. Additionally, they were obliged to notify debtors about their eligibility for loan forgiveness and ensure they had access to their diplomas or transcripts. It should also be noted that the defendants did not admit nor denied any wrongdoing.
University of Phoenix Settlement: Do I Qualify?
The University of Phoenix settlement looks like a fantastic opportunity for debtors. In fact, it benefitted many debtors as the amount was the highest settlement against a for-profit institution investigated by the Federal Trade Commission. However, unfortunately, not everyone could qualify for this chance. The eligibility requirements included the time period for enrollment- between October of 2012 and December of 2016. As the marketing campaign was launched during this period, the officials decided that the marketing strategy could have highly influenced students enrolled. Additionally, only the loans directly owed to Phoenix University could qualify. Other debtors with federal, state, or private loans, could not get their shares from the debt forgiveness opportunity.
Yet, do not lose your hopes if you have studied at Phoenix University. Even if you do not qualify for the University of Phoenix lawsuit settlement, other opportunities can help to reduce or get rid of the debt fully. One of such options is Borrowers’ Defense to Repayment, which can bring 100% debt reduction. Others who do not qualify for this loan forgiveness program can benefit from repayment plans, consolidation, or settlement to decrease the debt burden. Keep reading to get familiar with these options promising a debt-free future.
Borrowers’ Defense to Repayment
If you think that the Phoenix University practices falsely influenced you or misled you in your enrollment decision, you can get the benefit of Borrowers’ Defense to Repayment. This loan forgiveness program can bring partial or full elimination for your direct loans. Keep in mind that this opportunity does not involve private, state, or other federal loans. Specifically, Federal Family Education Loan and Perkins Loans do not qualify for this program. Even great, Borrowers’ Defense can refund the previous payments.
There are two main conditions to qualify for the forgiveness program. First, a student should face misconduct or believe that the university engaged in deceitful actions about educational matters. Hence, issues like false accreditation, wrong information about tuition costs, or credit transfers can make applicants eligible. On the contrary, personal matters like harassment or physical damages cannot be grounds for this program.
Second, an applicant must prove the wrongdoing. Without providing necessary documents and proofs, one cannot get the support of the Education Department. This process involves a clear explanation of your undesirable experience and supply of documents like email communications, brochures, transcripts, agreements, etc.
If a student is not eligible for the University of Phoenix settlement, application to another forgiveness program can take only thirty minutes. The application form for the Borrowers’ Defense is easily accessible online. One can fill and submit it online. Alternatively, it is possible to print the filled form, sign it, and mail it. However, first, applicants should create an account on Borrowers’ Defense platform and enter details like school name, enrollment program, and dates, together with all documentation to support the claims.
Review and Response
Once the application is submitted, applicants need to wait for the Department of Education to review the case. It might take as long as a year. However, when they make a decision, they will notify the borrowers by email or mail. In this notification, one can find the result- approval and denial, the reasons for rejection, and the percentage of reduction if approved. An applicant who is not satisfied with the result can request a new review. Such borrowers should send an email to the official address with the subject “Request for Reconsideration.” Alternatively, the requests can be sent via email.
Plus, if a borrower wants to make new allegations other than the previous application cases, he/she can fill a new form. Yet, in this new application, the debtor must explain why they felt the need to apply again and support the causes with reliable documentation.
What should be Included in the Reconsideration Request?
There are three main factors to include in the request:
- The applicant should explain what is incorrect in the results.
- They should explain why they believe that the result was incorrect.
- The borrowers must submit evidence to back up their arguments.
Before you apply for the reconsideration, you should keep in mind that the loan forbearance status will not be applicable in this case. Besides, a borrower cannot add new allegations. If there is any new allegation that was not mentioned in the initial application, the Education Department will reject the review. As mentioned before, in these cases, it is advisable to submit a new application.
Reconsideration is also possible when the borrowers’ applications are successful. They can still request the Education Department to recheck the case, but they should wait till the discharge is applied to debt completely.
How Much Forgiveness is Received?
Borrowers’ Defense can bring full or partial elimination. When an applicant receives a notification about the result, he/she will find the percentage of reduction. It might not be as great news as the University of Phoenix settlement, but any decrease in debt can financially help the borrowers. The Education Department calculates this percentage based on the earnings information. A statistical method called “standard deviation” is utilized to determine how much debt relief a borrower qualifies for.
What Happens During the Review Process?
The great news for the borrowers is that they can stop the interest collection during the review process. If they agree to a forbearance status in the application, they will not be obliged to make monthly payments. However, in case of rejection status, the payments will resume, and the debtor will be obliged to repay the accumulated interest. Borrowers who want to avoid such accumulation of debt can still make the payments monthly during the review process.
Borrowers receiving the loan forgiveness should repay the rest of the debt if they received partial cancellation. Besides, they will be responsible for the accumulated interest during the forbearance status. Another great benefit- cash refunds can also be applicable in this case. However, there exist some limitations. First, borrowers should apply during the applicable time period to qualify for the refunds. Second, the payments should exceed the amount left after discharge is applied. The loan servicers eliminate the debt as a result of the Borrowers’ Defense. Next, they determine qualification. If a debtor is eligible for a debt refund, the loan servicer will return the amount.
Need Help for Application?
Borrowers’ Defense is one of the easiest programs to be eligible for because you will qualify if you face misconduct. In the case of the nonexistence of this condition, you do not qualify. That simple, white and black, no grey area. However, applicants should put more effort to prove their arguments. Otherwise, the eligibility will not guarantee loan forgiveness.
Borrowers should provide any documentation supporting the claims, including email communications, advertising material with false information, etc. Besides, they should clearly express their ideas in the application. We understand that these requirements are tough, and not everyone can be successful in this process. Therefore, Student Loans Resolved experts deliver help to anyone in need of guidance. Our experts have years of experience in this field and have helped numerous debtors to reduce their obligations.
What if I do not Qualify?
University of Phoenix settlement forgives the direct debt owed to the school. If you wonder who qualifies for the University of Phoenix settlement, you can check the sections above. We discussed that ineligible borrowers could get the benefit of Borrowers’ Defense to Repayment. However, if you have not faced any misconduct, it is not advisable to apply false information. Instead, you need to check other options, and if you qualify for any of them, our specialists can guide you in the application process.
Another fantastic opportunity for student loan borrowers can be debt consolidation. Though consolidation does not reduce the debt the way the University of Phoenix settlement did, it helps borrowers effectively manage their obligations. Student Loan Consolidation program involves combining two or more loans into one. In this way, a borrower will make only one payment instead of multiple monthly payments.
People can doubt the effectiveness of this program. However, you need to understand when consolidation is beneficial. Firstly, consolidation can bring a new interest rate lower than the total amount paid for multiple loans. Hence, debtors can enjoy lower monthly payments if they have financial difficulties currently. Second, federal debt consolidation is easy to apply. It covers diverse types of debt, including Perkins, Plus, or supplemental loans. Lastly, borrowers can get their new interest fixed, which means that market conditions will not increase payments. No matter the current interest rates, the borrower will pay the same interest rate agreed in the loan terms.
However, there also exist downsides to this program. As mentioned before, it does not grant debt cancellation as the University of Phoenix lawsuit settlement did. Plus, the lower interest rates are usually achieved through prolonging the debt payback period. Hence, a borrower can get rid of the debt after tens of years. Besides, if a borrower takes advantage of debt consolidation, he/she can lose the qualification to other financial aid programs such as Public Service Loan Forgiveness. Due to a diverse range of benefits and drawbacks, one should evaluate the conditions carefully before utilizing this method to reduce the obligations.
Neither the University of Phoenix settlement nor federal debt consolidation is accessible to private borrowers. In fact, private borrowers face fewer options for financial aid compared to federal debtors. However, they can still have some opportunities to make debt terms manageable. Refinancing is one of those possibilities. In general, refinancing is similar to federal debt consolidation, but it allows the combination of federal, private, or both loan types. Besides, refinancing is provided by private companies, unlike consolidation. This process involves getting a new loan to pay out other loans. In this case, the debtor will have one single payment per month. The payment can be lower than the previous interest rate and provide a variable structure.
Settlement and Negotiation
Another strategy for debt management for private borrowers can be negotiation with the lender. It means a debtor can contact the private lender and explain the challenges he/she faces to repay the debt. If borrowers can convince the lenders, they can get temporary advantages such as reduced interest or debt collection suspension. For instance, if suddenly a borrower loses the job, the lender can agree to three-to-five months of nonpayment. Once the borrower finds a job, he/she can resume the payments.
One can question why lenders will agree to such benefits. Actually, there is no guarantee that the lender will be convinced. The lenders have the right to demand the original debt terms, and they are not obliged to do any favor to the student loan borrowers. However, if a borrower defaults, this situation will create challenges for the lenders, too. Defaulting means the debtor will not be able to repay the debt. In this case, the lender should get third-party help, such as lawyers, to sue the debtor and collect the loan amount. Sure, this process is costly and requires some time. Instead of dealing with such a hassle, the lenders might grant some benefits to borrowers.
How to Convince the Lender?
However, again, keep in mind that the lender does not have any obligation to provide the conditions you are asking for. Hence, while discussing favors with lenders, borrowers should be extremely careful. First, do not do any disrespectful action toward the lender, including shouting, demanding, or threatening. Second, be as patient as possible and, if required, contact several times. Here the most important factor in explaining the challenges the borrowers face. Besides, the debtor should show that he/she wants to repay the debt till the last penny and, therefore, needs some favors.
Understandably, such an approach requires extensive communication and persuasion skills. Plus, the debtors should be emotionally calm to solve the issues with the lenders calmly. Not every borrower has these qualities. Therefore, there exist third-party experts who can negotiate with lenders. They have experience in these issues, and their networking with the private lenders allows them to get some favorable terms.
Another option for borrowers is to declare loan bankruptcy to get rid of the debt fully. However, it is not an advisable way. There exist many downsides that make bankruptcy suitable only if there exists no other option. Mostly, the court imposes this decision. Hence, a borrower should prove in the court that he/she cannot meet the debt obligations even if they do everything necessary. In other words, debtors should indicate that they will not survive if they pay the debt.
This condition is what makes bankruptcy impossibly hard to get. If borrowers have smartphones or even spend a couple of dollars eating outside, they will not qualify. Besides, when debtors take advantage of bankruptcy, there will be a negative impact on the credit reports. The credit ratings will go down, which means as long as ten years, the borrowers might not be able to rent accommodation, get insurance, or a new credit line easily.
Lastly, there is no guarantee that the court will grant bankruptcy to eliminate the debt. There exist two types of bankruptcy. In Chapter 7 bankruptcy, the assets of the borrower are liquidated, and debt is canceled. However, Chapter 13 bankruptcy does not discharge the debt. Instead, the court reorganizes the loan payment structure so that the borrower can repay the debt slowly.
Which Program to Choose?
The investigation was started by the Federal Trade Commission in 2011 against Phoenix University and its parent company. The lawsuit ended with the University of Phoenix settlement, which granted $191 million to debtors. $141 million was in the form of loan forgiveness and $50 million as cash refunds. However, the number of people who qualify for the University of Phoenix settlement was limited. The settlement involved only the loans owed directly to the institution. Besides, students enrolled between 2012-2016 could benefit.
If you do not qualify for the settlement benefits, there still exist options to get rid of the debt. Borrowers’ Defense can eliminate the debt, while consolidation can bring favorable loan terms. Private borrowers, in turn, can take advantage of refinancing or negotiation with the lenders. The last resort of the debtors is bankruptcy.
All these programs have benefits and downsides. Before choosing one of them, a debtor should be well aware of the conditions to choose the most suitable program. If you do not qualify for the University of Phoenix settlement, you can get third-party help to choose a financial assistance opportunity. Our experts can also guide you in this process and find the program that will maximize the benefits. Contact us today to get rid of your debt as soon as possible.