University Of Phoenix To Stop Stripping Students Of Their Right To Sue School

A recent study found that student enrollment agreements at virtually all of the nation’s biggest for-profit colleges have forced arbitration clauses that strip students of their rights to file a lawsuit against the school, and in most cases bar students from joining their similar or identical disputes together. Under pressure from lawmakers and consumer advocates who questioned how these schools could continue to take billions in federal aid while trying to avoid accountability in the courtroom, the nation’s biggest for-profit educator has decided to stop using the controversial arbitration clauses.

Apollo Education Group, parent company of University of Phoenix, announced today that, effective July 1, neither Phoenix nor Apollo’s Western International University would use mandatory arbitration clauses in their students’ enrollment agreements.

The company does not force students at its other U.S.-based schools — the College for Financial Planning and The Iron Yard — into arbitration, so this move would bring the entire Apollo portfolio in line.

“We have worked hard to further improve the student experience at all of our institutions, and it’s clear that eliminating mandatory arbitration is the right choice for all of our students,” said Apollo CEO Greg Cappelli in a statement.

Sen. Dick Durbin of Illinois, who has been critical of Apollo and the for-profit education industry in general said in a statement today that he is cautiously optimistic about the policy change.

“Mandatory arbitration clauses are unfair to students and their families. Many for-profit schools have promised to end these unfair practices and failed to deliver,” said the senator.

The policy change is likely tied to the recent decision to take Apollo Education private and merge with an investor consortium led by the Vistria Group.

Vistria’s Tony Miller is slated to take over as chairman of Apollo’s board when the deal is complete. As a former Deputy Secretary of the U.S. Department of Education, he has been blunt about the public image of for-profit institutions like University of Phoenix.

“For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance,” said Miller in February. “This doesn’t need to be the case.”

However, Sen. Durbin appears to remain somewhat skeptical that Apollo will change its stripes overnight, given that a privately held company no longer needs to publicly disclose things like executive compensation, pending litigation, or ongoing law-enforcement investigations.

“We will watch carefully to see if Apollo will truly change its practices and protect its students,” said Durbin.

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