If you attended the University of Phoenix between October 2012 and December 2016, you may qualify for two separate forms of relief from the University of Phoenix settlement and related federal actions: a cash refund or debt cancellation from the Federal Trade Commission’s $191 million settlement, and a full discharge of your federal student loans through the Department of Education’s Borrower Defense to Repayment program. The FTC piece has already been distributed automatically to eligible students. The loan discharge requires you to apply, and for many borrowers it is worth far more than the cash refund.
The FTC $191 Million Settlement
In December 2019, the FTC reached a $191 million settlement with the University of Phoenix and its parent company, Apollo Education Group, over the school’s “Let’s Get to Work” advertising campaign. The ads gave prospective students the impression that companies like AT&T, Microsoft, Twitter, Adobe, and Yahoo worked with the university to create hiring opportunities and shape its curriculum. The FTC found those claims deceptive, and it found the ads specifically targeted servicemembers, veterans, and military spouses.1Federal Trade Commission. FTC Obtains Record $191 Million Settlement from University of Phoenix to Resolve FTC Charges It Used Deceptive Advertising to Attract Prospective Students
The $191 million broke into two parts: $50 million in cash refunds to former students, and $141 million in cancellation of debts students owed directly to the school. The debt cancellation covered things like unpaid tuition balances owed to the university itself. It did not touch federal or private student loans, which are held by other lenders or the government.2Federal Trade Commission. University of Phoenix Settlement
Who Qualified for a Cash Payment
The FTC identified eligible students automatically from enrollment and payment records. There was no application to file. To qualify for a cash payment, you needed to meet both of these:
- You enrolled in an associate’s, bachelor’s, or master’s degree program at the University of Phoenix between October 15, 2012, and December 31, 2016.
- You paid more than $5,000 to the university through some combination of cash, grants, loans, or military benefits.
Students who met those criteria but did not receive debt cancellation through the settlement were eligible for cash refunds. The FTC sent a first round in March 2021 and a second in July 2023, distributing more than $48.7 million across those rounds. Because money remained in the fund, the FTC later sent more than 21,500 additional payments totaling over $432,000 to people who accepted their earlier payment and had paid the university $37,201 or more.2Federal Trade Commission. University of Phoenix Settlement
If you enrolled during the eligible window and never received a payment, the FTC refund page is where updates on further distributions would appear.
Federal Student Loan Discharge Through Borrower Defense
The FTC settlement did nothing for federal student loans. For those, a separate and often more valuable path exists. The Department of Education’s Borrower Defense to Repayment program lets federal Direct Loan borrowers seek full discharge of their loans if the school they attended engaged in misconduct that influenced their decision to enroll.3Federal Student Aid. Borrower Defense Loan Discharge
For University of Phoenix students, the Department of Education has already found that the school made substantial misrepresentations about employer partnerships to students who enrolled between September 21, 2012, and December 31, 2014. That finding supported approved group discharges totaling $37 million for borrowers who had applied during that window.4National Association of Student Financial Aid Administrators. ED Approves $37 Million in Borrower Defense Discharges for Borrowers Who Attended the University of Phoenix If your enrollment falls inside that range and you haven’t applied yet, you have strong grounds for a discharge based on the Department’s own findings.
If you enrolled outside that September 2012 to December 2014 window, you can still apply individually. You’ll need to make your own case, but the FTC’s findings about the broader advertising campaign provide useful supporting evidence for anyone who enrolled through December 2016.
How to Apply for Borrower Defense
You submit a Borrower Defense application online at StudentAid.gov, or download a paper version and mail it in.3Federal Student Aid. Borrower Defense Loan Discharge The application asks for your personal information, details about when and where you attended, and a written narrative describing how the school misled you.
The narrative decides most applications. Explain specifically what the school told you, how those statements were misleading, and how they influenced your decision to enroll or take out loans. Focus on the “Let’s Get to Work” campaign: claims about employer partnerships, hiring preferences, or curricula supposedly designed with specific companies. If you had difficulty finding employment related to these promises, describe that too.
Supporting documentation strengthens the case. The Department accepts promotional materials, enrollment agreements, email communications with school staff, course catalogs, and transcripts. Screenshots of online ads or brochures you received are especially useful. In-person or phone conversations with recruiters who made specific job placement promises can be described in the narrative even without documents.
What Happens After You Apply
Once the Department determines your application is materially complete, your federal student loans go into forbearance and collection activity stops while your claim is reviewed. That protection applies to all your federal loans, not only those tied to the University of Phoenix. No collection calls, no wage garnishment, no payments due during the wait.3Federal Student Aid. Borrower Defense Loan Discharge
The wait can be long. Under the 2023 regulation, the Department has up to three years to decide on your application after determining it’s complete. Actual processing times vary with application volume and the complexity of your claim. You’ll get notice by email or mail once a decision is reached.
If your claim is approved, the Department discharges the remaining balance on the federal loans you took out to attend the school. You may also receive a refund of payments you already made on those loans. For borrowers who spent years paying on loans tied to a degree earned under false pretenses, that refund can be substantial.
If Your Claim Is Denied
A denial isn’t the end. If your application was individually reviewed and denied, you can request reconsideration within 90 days of the written decision notice. Reconsideration must be based on at least one of the following:
- An administrative or technical error in how the Department processed your application.
- New evidence you didn’t provide before and that wasn’t cited in the denial letter as a reason for rejecting your claim.
- A state law standard, if your Direct Loans were disbursed before July 1, 2017. You can ask for reconsideration under your state’s consumer protection laws.
One limit: reconsideration cannot raise entirely new allegations of misconduct. If you want to claim the school misled you in a way your original application didn’t cover, file a new application instead. You can submit the reconsideration form online at StudentAid.gov or mail it to the Federal Student Aid Information Center.
While reconsideration is pending, your loans go back into forbearance (or stopped collections if you’re in default), so payment and collection activity pauses during review.
Private Student Loans Are Not Covered
Neither the FTC settlement nor Borrower Defense covers private student loans. Borrower Defense applies only to federal Direct Loans. If you borrowed from a private lender to attend the University of Phoenix, your options are more limited. You may have claims under state consumer protection laws, but pursuing them typically means hiring an attorney and filing a lawsuit or arbitration demand. You can also file a complaint with the Consumer Financial Protection Bureau if the school’s conduct affected your private loans. These paths are harder and less certain than the federal discharge process.
GI Bill Benefits Are Not Currently Restored
The University of Phoenix was the largest recipient of Post-9/11 GI Bill funds since that program began, and the FTC found that the deceptive ads specifically targeted military-connected students.1Federal Trade Commission. FTC Obtains Record $191 Million Settlement from University of Phoenix to Resolve FTC Charges It Used Deceptive Advertising to Attract Prospective Students Even so, the VA currently lacks authority to restore GI Bill entitlement to veterans defrauded by a school’s misleading marketing.
Legislation called the Student Veteran Benefit Restoration Act has been introduced in Congress to give the VA that authority and to require deceptive schools to reimburse the VA. As of early 2025, the bill had not been signed into law. Earlier versions did not include retroactive relief for veterans who already exhausted their benefits.5Military Times. A New Bill Aims to Make Defrauded GI Bill Vets Whole Again. Will It?
Watch Out for Debt Relief Scams
Settlements like this draw predatory companies that charge for services you can get free. The Consumer Financial Protection Bureau flags several warning signs specific to student loan scams:6Consumer Financial Protection Bureau. What Are the Signs of a Student Loan Scam?
- Upfront fees. Companies that charge you before providing help are breaking the law. Your loan servicer handles these processes at no cost.
- Guaranteed forgiveness. No private company can guarantee a discharge or negotiate a special deal.
- Requests for your FSA ID. Neither the Department of Education nor your servicer will ever ask for your Federal Student Aid login.
- Cutting off servicer contact. Scams often get you to sign a third-party authorization that routes communication through them.
- Claims of government affiliation. Legitimate federal processes run on “.gov” websites, not through private companies claiming to represent the Department.
Every step of the FTC refund process and the Borrower Defense application is free. If someone offers to file your claim for a fee, that alone tells you what you need to know about the offer.