Update: On December 10, the Federal Trade Commission announced it reached a $191 million settlement with the University of Phoenix. As part of the settlement, the school has agreed to cancel $141 million dollars in private student loan debt owed to the school.
To be eligible for the loan cancellation, student borrowers had to have attended the school between October 2012 and the end of 2016.
If you're eligible, you should receive a letter and email from the University of Phoenix and its parent company, Apollo Education Group,stating: "You no longer owe any money to the University of Phoenix. You don't have to do anything to get this relief. Your account balance will be cleared within 45 business days." You can read more about the University of Phoenix class action settlement here.
As a current or former student of the University of Phoenix, perhaps you heard reports about loan forgiveness from old classmates or on the news.
Right now, the University of Phoenix is in a bind, mostly due to its own profit-driven ambitions that earned it this poor honor: University of Phoenix students carry more student loan debt than students of any other school.
You couldn’t guess how much money it is, so I’ll tell you. 35 Billion dollars.
The default rates are also astronomical, hovering around 25%.
As bad as the debt is, the story gets worse considering how the University of Phoenix operates.
The school inflates post-graduation salary reports, targets veterans and minorities with unfulfilled promises, and pushes its students to take out loans so that the school can profit from them in the end.
Not surprisingly, the school has faced and currently faces lawsuits. They’re hardly the only organization facing student loan lawsuits.
University of Phoenix students may already be aware of this or felt that the school misrepresented the quality of its education.
What are your options for a loan discharge from the University of Phoenix?
There are a few things to understand.
Private Student Loan Settlements Aren’t a Common Occurrence
First, you should know that private student loan forgiveness rarely happens.
Frankly, there’s no incentive for a private company to let you off the hook.
So if your loans were through a private company, even those taken out to attend a now closed or for-profit school like the University of Phoenix, there’s likely little you can do.
What If The University of Phoenix Ends Up Closing?
For-profit schools have seen a steady decrease in attendance over the last several years. Some have even closed their doors.
At its peak, the University of Phoenix enrolled 470,000 students. That was in 2010.
That number has since dropped below 120,000.
So while the University of Phoenix hasn’t called it quits, the time may come when it does. And for students of other schools who have closed, it’s good to know your options.
Click here to learn Can I Get Student Loan Forgiveness if my School Closed?
The likelihood of getting a loan discharge is far greater if you have federal student loans.
For those with private student loans, you’ll most likely have to repay your loans anyway. However, some states offer assistance and programs. A good person to contact is your Attorney General.
If the school closed while you attended, you might end up in a teach-out situation, where your credits transfer to a new school and you can finish your education.
How do I get a University of Phoenix loan discharge?
If you have federal student loans taken out for your education at the University of Phoenix, the next step is to apply for a Borrower Defense to Loan Forgiveness.
The application will ask you detailed questions about how the school misled you about employment prospects, program costs and loans, transferring credits, career and education services, and any other area where you felt misinformed.
Be as specific and detailed as you can.
As part of the application, if you are not currently in default on your loans, you can ask for forbearance.
This means you don’t have to make payments while your application is processing.
A few words of warning are needed.
First, don’t stop making payments until you receive notice not to.
Second, you will have to pay off the interest accrued until your application is either approved or rejected.
Third, the University of Phoenix loan forgiveness discharge may not be for the full amount of your loans. It could be, but it could also only discharge a percentage of your total. Be prepared to keep making payments after the loan settlement.
As a student loan lawyer, I can review your application and help you strengthen your chances of a discharge.