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University of Phoenix|Must Produce Records

PHOENIX (CN) - A federal judge ordered the University of Phoenix and its parent company Apollo Education Group to comply with civil investigative demands for records in the FTC's investigation of deceptive advertising at the profit-seeking university.

Apollo disclosed in an 8-K filing with the SEC that it received the demands from the Federal Trade Commission on July 28 last year.

The FTC sought documents and information about the University of Phoenix's "marketing, recruiting, enrollment, financial aid, tuition and fees, academic programs, academic advising, student retention, billing and debt collection, complaints, accreditation, training, military recruitment, and other compliance matters, for the time period of January 1, 2011 to the present."

Apollo said at the time that it would comply fully with the FTC. But the FTC filed a petition on Jan. 13, seeking an order requiring Apollo's compliance. It asked Apollo and Phoenix for education records containing information directly related to students.

Universities such as the University of Phoenix risk losing federal funding under the Family Educational Rights and Privacy Act (FERPA) if they disclose education records without written permission, but "in some circumstances FERPA does not require such consent," the FTC said. It said its demands qualify as a special circumstance because it constitutes a "subpoena issued for a law enforcement purpose."

While Apollo and the University of Phoenix produced some of the requested documents, the FTC said, they balked by claiming that full production "would be impractical and complex given the nature of the responsive material, the number of current and former students, and the difficulty in locating students or their families."

The University of Phoenix has about 200,000 students and 900,000 alumni.

The FTC says it will protect student information from public disclosure.

Apollo and the University of Phoenix did not oppose the petition, which was granted by U.S. District Judge Susan Bolton.

A University of Phoenix representative said the school has "cooperated from the outset of the FTC's broad, far-reaching inquiry, and we are committed to providing information for the federal government's review."

"We are also committed to complying with federal privacy laws before producing student records. That is precisely why the FTC's petition for a court order was sought without our objection and now provides a way for us to produce students' records while remaining compliant with applicable federal laws protecting those very students."

The FTC's demand is not the only trouble Apollo has had with the federal government.

In October, the Department of Defense announced that the University of Phoenix would be placed on probation and barred from allowing servicemembers to use federal money to attend. It also was banned from recruiting on military bases.

"The institution will not be authorized access to DoD installations for the purposes of participating in any recruitment-type activities," Dawn Bilodeau, chief of the Defense Department's Voluntary Education program, said at the time. "Further, no new or transfer students at the institution will be permitted to receive DoD tuition assistance."

In an 8-K SEC filing on Oct. 9, 2015, Apollo announced that students enrolled in the Department of Defense Tuition Assistance Program would not be affected by Phoenix's probationary status, but "newly enrolled or transfer students of the university will not be eligible."

More than 1 million former students of the University of Phoenix owe $35.5 billion in student debt: more indebted students than any other college in the United States.

The FTC did not respond to a request for comment.

The University of Phoenix has paid $175 million in fines, settlements and attorney's fees since 2000 from class action lawsuits and government enforcement actions, according to publicly available information. In 2008 it was the nation's largest receiver of federal aid for education: $2.5 billion. Many of the more than 2000 lawsuits against it claimed that its primary motivation was not educating students, but getting the federal grant money.

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