The University of Phoenix, which runs an online college popular among military veterans, is under federal investigation for possible deceptive or unfair business practices, its parent company the Apollo Education Group told shareholders yesterday. In an SEC filing, the company disclosed that it had received a "civil investigative demand" from the Federal Trade Commission this week. According to the document, investigators asked for information on a "broad spectrum" of matters, including marketing, recruiting, enrollment, financial aid, tuition, academic programs, and billing and debt collection, as well as other facets of the business. The filing lists "military recruitment" as one of the areas the FTC is examining.
The for-profit, publicly traded company is the largest recipient of federal student aid for veterans and often a sponsor at military education and employment events. Since 2009, the University of Phoenix's online program has collected more than $488 million in tuition and fees for veterans—a figure that dwarfs nearly every other institution identified as a GI recipient by the Department of Veterans Affairs. The FTC probe is the latest of several state and federal investigations into the for-profit college industry. Critics say many of these colleges are aggressive in recruiting students who qualify for large amounts of federal student aid, including GI money. But the credits often don't transfer to other schools and aren't recognized by employers. Industry officials say they're being scrutinized unfairly and that for-profit schools have expanded education opportunities to communities that wouldn't otherwise have access. (Read more University of Phoenix stories.)