Loan Forgiveness Options for Former University of Phoenix Students
Understand how misled University of Phoenix students may qualify for federal student loan forgiveness and what steps to take now.
Thousands of people enrolled at the University of Phoenix based on promises of strong job prospects and special hiring connections with major employers. Federal enforcement actions later found that many of those claims were deceptive, and the U.S. Department of Education is now approving federal student loan forgiveness for eligible borrowers through the borrower defense to repayment process.
This guide explains what happened, who may qualify for relief, and how to protect yourself and your student loan rights going forward.
Background: How the University of Phoenix Got Federal Scrutiny
The University of Phoenix, a large for-profit university, used advertising campaigns that highlighted relationships with well-known companies and implied that its students would receive unique hiring advantages. Federal authorities later concluded that these claims misled prospective students about their career outcomes and opportunities.
Key developments included:
- Federal Trade Commission (FTC) case: In 2019, the FTC announced a $191 million settlement with the University of Phoenix over deceptive advertising about job prospects and corporate partnerships.
- Debt and refund relief: The settlement required the school to cancel about $141 million in private student debt owed to the school and pay $50 million that the FTC used for refunds to certain former students.
- Department of Education action: Building on evidence from the FTC, the U.S. Department of Education (ED) later approved nearly $37 million in federal student loan discharges for more than 1,200 former University of Phoenix students under borrower defense rules.
These actions are part of a broader federal effort to address misconduct in higher education and deliver relief to borrowers whose schools misled or cheated them.
What Is Borrower Defense to Repayment?
Borrower defense to repayment is a federal program that lets borrowers seek cancellation of their federal student loans when their school engaged in certain types of misconduct, such as misrepresenting job placement rates, earnings outcomes, or program quality.
Under borrower defense rules:
- You can ask the U.S. Department of Education to discharge (forgive) eligible federal loans if your school broke certain laws or substantially misled you.
- If a claim is approved, ED can cancel some or all of your federal student loans and may refund payments you already made on those loans.
- The government may then seek to recoup that cost from the school, rather than from taxpayers.
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Borrower defense does not apply to private student loans issued by banks or other private creditors. It addresses federal loans such as Direct Loans held by the U.S. Department of Education.
How the Findings Affect University of Phoenix Students
Using documentation from both the FTC and the school itself, the Department of Education concluded that University of Phoenix misrepresented aspects of its job-placement advantages and corporate partnerships.
According to ED and the FTC, the school’s conduct included:
- Advertising that implied or stated that University of Phoenix students had special access to jobs at large, well-known companies.
- Suggesting that those employers were specifically seeking University of Phoenix graduates or that the school had hiring arrangements that did not actually exist.
- Targeting working adults who were seeking better careers, leading them to reasonably believe that enrolling would significantly increase their chances of being hired by high-profile firms.
ED determined that many borrowers reasonably relied on these claims when taking out federal loans, and that the misrepresentations were serious enough to justify complete cancellation of eligible federal loans for certain students.
Who May Qualify for Federal Loan Forgiveness?
Not everyone who attended the University of Phoenix will automatically receive loan forgiveness. Instead, specific criteria guide eligibility under borrower defense.
Core eligibility factors
Based on federal announcements and borrower defense rules, you may qualify if:
- You attended the University of Phoenix during a period covered by ED’s findings related to deceptive job-placement or hiring-partner claims.
- You took out federal student loans (such as Direct Loans) to attend the school.
- You submitted or submit a borrower defense application that aligns with the misconduct ED identified, such as misleading representations about employment opportunities.
For one major round of relief, ED approved discharges for more than 1,200 borrowers who enrolled between September 21, 2012, and December 31, 2014, and whose applications matched the documented misrepresentations.
Important limitations
- No automatic coverage for all borrowers: Many borrowers must still submit a borrower defense claim and have it evaluated individually.
- Federal loans only: Borrower defense applies to loans held by or on behalf of the U.S. Department of Education, not to private student loans.
- Evidence-based decisions: The Department reviews each application in light of the misrepresentations it has substantiated with evidence.
How to Check Your Status if You Already Applied
If you previously filed a borrower defense claim related to the University of Phoenix, you do not need to reapply solely because of this new relief announcement.
Steps to verify your status include:
- Log in to your Federal Student Aid account at StudentAid.gov and go to the borrower defense page to manage your applications and see updates.
- Watch for communications from the U.S. Department of Education, which will notify borrowers if their claims are approved and their loans are being forgiven.
- Review your loan balances periodically to confirm when a discharge has been processed and whether any refunds of prior payments are issued.
According to ED, borrowers whose claims are approved can receive full loan forgiveness on affected federal loans, have their balances reduced to zero, and see credit records updated to remove the discharged debt.
How to Apply If You Have Not Yet Filed
If you attended the University of Phoenix and believe you were misled by job-placement or hiring-partner claims, but you have not submitted a borrower defense application, you can still apply.
Basic application steps
- Visit the Borrower Defense information page at StudentAid.gov.
- Sign in with your FSA ID (your federal student aid username and password).
- Start a new borrower defense application and select the University of Phoenix as your school.
- Provide detailed information about how you were misled, including specific statements, ads, or representations you relied on.
- Upload or describe any supporting documentation, such as screenshots, emails, brochures, or notes from recruitment calls.
- Submit the application and keep copies of all information for your records.
The Department of Education reviews applications and may compare your statements with the evidence it already collected from prior investigations and enforcement actions.
What relief might be available?
| Type of Relief | What It Means |
|---|---|
| Full discharge | Entire remaining balance of eligible federal loans is canceled; no further payments are required and collection stops. |
| Refund of payments | Payments you already made on the discharged loans to the Department of Education may be returned to you. |
| Credit repair | Negative credit reporting related to the forgiven loans, such as delinquencies, may be removed from your credit file. |
| Collection relief | Wage garnishment or tax refund offsets tied to the discharged loans are typically halted. |
How This Forgiveness Interacts with Other Student Loan Programs
Borrower defense is only one of several programs that can relieve federal student loan burdens. The Biden–Harris Administration has used multiple tools to cancel or reduce student debt, including fixes to income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF) and discharges for borrowers with a total and permanent disability.
If you are a former University of Phoenix student, consider how these programs may relate to your situation:
- Borrower defense: Focuses on school misconduct. If your claim is approved, you may receive full discharge and refunds on affected loans.
- Income-driven repayment: Caps monthly payments based on income and family size and can lead to forgiveness after a set number of qualifying years.
- Public Service Loan Forgiveness: Cancels remaining Direct Loan balances for eligible public service workers after qualifying payments and employment.
- Disability discharge: Allows borrowers with total and permanent disabilities to have their federal loans forgiven under specific medical or benefits-based criteria.
You may pursue borrower defense in addition to other relief programs; however, the exact interaction can be complex. Federal Student Aid resources and, when needed, independent legal or nonprofit counseling can help you understand the best approach for your situation.
Recognizing and Avoiding Scams
Whenever a major loan forgiveness announcement is made, scam operations often appear, trying to charge fees for services the government offers for free. To protect yourself:
- Never pay upfront fees for loan forgiveness applications. Borrower defense and other federal relief programs are free through official government channels.
- Verify communications: Real emails or letters about federal loan forgiveness should direct you to official U.S. government websites (ending in
.gov), such as StudentAid.gov. - Be skeptical of guarantees: No legitimate company can promise approval of a borrower defense claim or instant loan cancellation.
- Protect your FSA ID: Do not share your Federal Student Aid username and password with anyone claiming they will manage your loans for you.
If you suspect a scam related to student loan relief, you can report it to the Federal Trade Commission through its official complaint channels.
Practical Checklist for Former University of Phoenix Students
Use this quick checklist to stay organized:
- Gather your loan records (servicer statements, National Student Loan Data System/StudentAid.gov records).
- Collect any advertising materials, emails, or notes that show the promises made about job placement or corporate partnerships.
- If you have already applied for borrower defense, log in to your StudentAid.gov account and check your application status.
- If you have not applied, review the borrower defense information and consider submitting an application if your experience matches the misconduct described by federal authorities.
- Keep an eye on your email and mail for updates from ED or your loan servicer about potential loan discharges or refunds.
Frequently Asked Questions (FAQs)
Q1: Does every University of Phoenix student automatically get loan forgiveness?
No. Federal relief is generally limited to borrowers whose situations fit the misconduct findings and who have approved borrower defense applications. Some groups may receive more streamlined relief, but many borrowers must still file and support a claim.
Q2: I received a payment from the FTC-related settlement. Can I still apply for borrower defense?
Yes. According to the FTC, getting a payment from the University of Phoenix settlement fund does not prevent you from applying for, or receiving, federal loan forgiveness through borrower defense.
Q3: Are my private student loans covered by this forgiveness?
No. The relief being discussed here concerns federal student loans held or guaranteed by the U.S. Department of Education. Borrower defense does not automatically cancel private loans made by banks, credit unions, or other private lenders.
Q4: Will forgiven loans hurt my credit?
When ED approves a borrower defense discharge, it generally directs that related negative credit reporting be deleted, which can improve your credit profile over time rather than damage it.
Q5: How long will it take to get a decision on my borrower defense application?
Processing times can vary depending on the volume of applications and the complexity of each claim. The Department of Education is continuing to process new and existing borrower defense applications and announces approvals in batches as they are completed.
References
- FTC Action Leads U.S. Dept. of Education to Forgive Nearly $37 Million in Loans for Students Deceived by the University of Phoenix — Federal Trade Commission. 2023-09-20. https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-action-leads-us-dept-education-forgive-nearly-37-million-loans-students-deceived-university
- University of Phoenix Settlement — Federal Trade Commission. 2023-09-20 (updated). https://www.ftc.gov/enforcement/refunds/university-phoenix-settlement
- Biden-Harris Administration Approves $37 Million in Borrower Defense Discharges for Over 1,200 Students Who Attended the University of Phoenix — U.S. Department of Education. 2023-09-20. https://www.collegeaidservices.net/2023/09/21/37-million-in-student-loan-debt-to-be-canceled-for-over-1200-university-of-phoenix-former-students/
- ED Approves $37 Million in Borrower Defense Discharges for Borrowers Who Attended the University of Phoenix — National Association of Student Financial Aid Administrators (NASFAA). 2023-09-21. https://www.nasfaa.org/news-item/31684/ED_Approves_37_Million_in_Borrower_Defense_Discharges_for_Borrowers_Who_Attended_the_University_of_Phoenix
- Borrower Defense Updates — Federal Student Aid, U.S. Department of Education. 2023-10-01 (updated). https://studentaid.gov/announcements-events/borrower-defense-update
- Statement from President Joe Biden on Student Debt Relief Action for University of Phoenix Borrowers — The White House (archived). 2023-09-20. https://bidenwhitehouse.archives.gov/briefing-room/statements-releases/2023/09/20/statement-from-president-joe-biden-on-student-debt-relief-action-for-university-of-phoenix-borrowers/
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