(CN) — Under a proposed settlement agreement announced Thursday, the University of Phoenix and its parent company Apollo Education Group would pay $4.5 million after authorities said they used illegal tactics to aggressively recruit members of the military to enroll as students.
The company has agreed to the deal — though at press time, a judge still needs to sign off.
In a complaint filed in state court in San Diego, the California attorney general’s office claimed that starting in 2012 and ending in 2015, the company created a team of ex-military employees — dubbed National Defense Liaisons — whose main purpose was to enroll new students from communities of armed service members.
Some liaisons would use their personal military retiree identification cards to get into military installations, National Guard armories and reserve centers to solicit students collect information for future recruitment efforts. All this was done without approval by Department of Defense officials — and in places where commercial solicitation is prohibited.
The company also created custom-made coins with its logo on one side and the U.S. Department of Defense or military seals on the other.
According to the attorney general's office, these coins gave the false impression that the military endorsed the University of Phoenix, allowing the company “to trade upon the loyalty, trust, and affection that military personnel have for their country, their military service, and their fellow servicemembers." In its complaint, the AG accused the company of violating California law on unfair competition and false advertising.
The proposed settlement would require the company to pay $4.5 million in penalties. That money would go towards funding military-service relief organizations like the Navy-Marine Corps Relief Society, Army Emergency Relief, the Air Force Aid Society and Coast Guard Mutual Assistance.
The company would also have to comply with “strong injunctive terms that aim to substantially address and curb its improper military-recruitment tactics,” California AG Rob Bonta stated in a press release.
“Today’s settlement sends a strong message that schools who use predatory practices to recruit servicemembers and veterans will be held to account," Bonta added. "California takes consumer protection seriously; we will vigorously protect those who have sacrificed so much to protect us.”
In his news release, Bonta linked efforts to recruit servicemembers to the “90/10 rule," a provision in the Higher Education Act of 1965 which requires for-profit colleges to get at least 10% of their funding from sources besides federal student-aid programs.
For-profit colleges went after military students because — until recently — they received educational benefits from the Department of Defense, GI Bill funds, and the Coast Guard’s tuition assistance programs rather than standard federal student-aid programs. In 2014, the Department of Defense started limiting schools’ access to military installations.
In 2021, President Biden and Congress amended the Higher Education Act to close the loophole that allowed for-profit colleges to exploit the “90/10 rule.” The University of Phoenix had been the top recipient of GI Bill and other military education benefits funding for the past decade, Bonta added in the complaint.
Despite agreeing to the settlement, the University of Phoenix stressed in a statement of its own that it believed it hadn't broken the law.
"As this settlement clearly indicates, the University denies any wrongdoing in this decade-old matter," a spokesperson told Courthouse News.
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