university of phoenix loan forgivenessuniversity of phoenix loan forgiveness

The University of Phoenix loan forgiveness, has faced scrutiny over the past decade for allegations of misleading students about job prospects and program quality. As a result, many former Phoenix students have found themselves saddled with substantial student loan debt and lacking the career opportunities they were promised. This has spurred questions around whether loan forgiveness options can provide relief for affected students.

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Overview of the University of Phoenix

The University of Phoenix is a for-profit university that offers online and campus-based degree programs for working adults. It grew rapidly in the 2000s, becoming the largest university in the country with hundreds of thousands of students enrolled [1].

However, the school faced growing concerns over recruitment tactics, quality of education, and student outcomes. Government investigations found that the University of Phoenix had engaged in deceptive marketing and recruitment practices [2]. As a result, enrollment declined sharply over the 2010s as the school faced backlash.

Many former Phoenix students have struggled with repaying student loans they took out to attend the school. This had led to interest in whether loan forgiveness programs can help these borrowers overcome debt burdens.

Loan Forgiveness Options for University of Phoenix Students

There are a few potential options for loan forgiveness that may be available to former University of Phoenix students:

Borrower Defense to Repayment Discharges

Borrower Defense to Repayment allows federal student loan borrowers to have their loans forgiven if their school engaged in misconduct or failed to deliver on promised educational services. Phoenix students who feel they were misled or deceived could potentially qualify for discharges under this program.

In 2022, a settlement provided $37 million in Borrower Defense loan forgiveness for over 1,200 former Phoenix students. Many more students are likely eligible as well.

To qualify, borrowers must demonstrate that Phoenix violated certain state laws in relation to their education. Students will need to file detailed claims to have their cases reviewed.

Closed School Discharges

If the University of Phoenix were to close at any point, students who withdrew prior to closure could potentially qualify for Closed School Discharges. This would allow federal loan balances to be forgiven.

However, the University of Phoenix is currently still in operation, albeit at a smaller scale than before. So this discharge is not an option for most borrowers currently.

Forgiveness for University of Phoenix Institutional Loans

A 2016 settlement with the Federal Trade Commission cancelled $141 million in outstanding loans owed directly to the University of Phoenix. This provided relief for students who took out institutional loans with the school between 2012-2016 [6].

Unfortunately, this settlement only covered private Phoenix loans. Most students have federal Direct Loans or FFEL Loans, which were not included. So this avenue only helped a relatively small subset of borrowers.

Challenges in Receiving Loan Forgiveness

While the above options provide paths to potential student loan forgiveness, there are challenges Phoenix students may face in actually receiving discharges:

  • Narrow eligibility criteria: Programs like Borrower Defense require borrowers to meet specific eligibility standards that can be difficult to prove. Students may need extensive documentation of misconduct.
  • Long review times: It often takes over a year for forgiveness claims to be reviewed and processed by the Department of Education. This leaves borrowers waiting in limbo.
  • High denial rates: Data from the DOE shows that most Borrower Defense claims are denied, sometimes over lack of evidence [7]. Appeals are possible but not guaranteed.
  • Tax liabilities: Any forgiven debt could be treated as taxable income by the IRS unless special waivers apply. This may create major tax bills.
  • Ongoing payments: Borrowers usually have to remain in repayment on federal loans while their forgiveness claims are reviewed. This builds more interest over time.

While forgiveness can be possible, these obstacles mean it’s not accessible or guaranteed for all University of Phoenix students. Many borrowers are still responsible for repaying their loans.

FAQ on University of Phoenix Loan Forgiveness

What types of loans are eligible for forgiveness?

Only federal student loans – Direct Loans and FFEL Loans – are eligible for forgiveness programs like Borrower Defense and Closed School Discharges. Private student loans do not qualify. The 2016 UOP settlement only applied to institutional loans directly from the University of Phoenix.

How do I apply for Borrower Defense forgiveness?

You must submit an application with the U.S. Department of Education and provide supporting evidence that Phoenix violated laws regarding your education experience. An attorney may be useful when filing a detailed claim.

What if my Borrower Defense claim gets denied?

If your claim is rejected, you can request reconsideration and submit additional evidence. However, most denials are upheld upon reconsideration. At that point, your only option is to pursue legal action to appeal the decision.

How long does it take to receive loan forgiveness?

It often takes over 12 months for the DOE to review Borrower Defense and Closed School Discharge claims. The process is lengthy. If approved, it takes an additional couple months for the loans to be discharged. You must continue making payments until then.

Will I owe taxes on forgiven debt?

Potentially yes, unless special circumstances allow the discharged debt to be excluded from taxable income. You may need to request an insolvency determination from the IRS. Consult a tax professional to understand possible tax implications.


The University of Phoenix is facing major backlash for allegations of exploitative practices that left many students saddled with debt. While options like Borrower Defense to Repayment provide potential pathways to loan forgiveness, the reality is that relief is difficult to obtain for most borrowers. Strict eligibility requirements, long review times, high denial rates, and tax liabilities represent substantial hurdles. As a result, former Phoenix students still shoulder significant student loan burdens and may struggle to achieve forgiveness. It’s an unfortunate outcome highlighting the need for reforms and better oversight of the for-profit education industry.

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