University of Phoenix Pays $78.5 Million Whistleblower Settlement

The country’s largest for-profit college will pay nearly $80 million dollars to settle allegations that it defrauded the U.S. Department of Education. The settlement comes after two former employees of the school pressed the case alleging University of Phoenix obtained billions in federal student loan and Pell Grant funds based on false statements of compliance with the Higher Education Act.

The Act prohibits colleges that receive government money from making incentive payments to recruiters based “directly or indirectly” on the number of students they sign up. The law is intended to discourage recruiters from using misleading tactics to coax unqualified students to sign up for classes at the taxpayers’ expense.

This case focuses attention on serious complaints both students and former employees of several for-profit colleges have recently brought to light. The James Hoyer Law Firm is currently investigating similar issues, from admissions reps acting as sales people to charges that job placement statistics are being falsely inflated.

In the University of Phoenix case, the federal government will recover $67.5 million as a result of the settlement. The whistle-blowers will share $19 million for their efforts and persistence  in exposing what they witnessed.  Click here to learn more about the False Claims Act and what exactly a whistle-blower is.