Tag: Investors

  • PXED — A $22 Billion Student‑Debt Gamble Investors Should Beware

    PXED — A $22 Billion Student‑Debt Gamble Investors Should Beware

    Warning to Investors: Phoenix Education Partners (PXED) may present itself as a cutting‑edge solution in career-focused higher education, but it’s built on the same extractive infrastructure that powered the University of Phoenix. With nearly a million students still owing an estimated $22 billion in federal loans, backing PXED isn’t just a financial bet — it’s a moral and reputational risk.

    PXED’s leadership includes powerful private-equity players: Martin H. Nesbitt (Co‑CEO of Vistria and PXED trustee), Adnan Nisar (Vistria), and Theodore Kwon and Itai Wallach (Apollo Global Management). Also in the mix is Chris Lynne, PXED’s president and a former Phoenix CFO intimately familiar with UOP’s controversial enrollment and marketing strategies. These are not educational reformers — they are dealmakers aiming to extract value from a student-debt pipeline.

    Higher Education Inquirer’s College Meltdown Index highlights how PXED fits into a broader financialization of higher education. Rather than reforming the University of Phoenix, its backers have resurrected it under a new brand — one that continues to enroll vulnerable adult learners, harvest federal aid, and operate with considerably less public oversight. 

    Whistleblowers previously documented that Phoenix pressured recruitment staff to falsify student credentials, enrolling people who wouldn’t otherwise qualify for federal aid. Courses were allegedly kept deliberately easy — not to teach, but to keep students “active” enough to trigger aid disbursements. Internal marketing also exaggerated job prospects and corporate partnerships (e.g., with Microsoft and AT&T) to entice students. 

    PXED may lean on a three‑year default rate (often cited around 12–13%), but that number is deeply misleading. Many UOP students stay stuck in deferment, forbearance, or income-driven repayment, masking the real long-term risk of non-payment. This is not just a short-term liability — it’s a potentially massive, multiyear financial exposure for PXED’s backers.

    There was a significant FTC settlement that canceled $141 million in student debt and refunded $50 million to some students. But the scale of harm far exceeds that payout. Untold numbers of borrowers still have unresolved Borrower Defense claims, and the reputational risk remains profound.

    Beyond financial concerns, there’s a major ethical dimension. HEI’s Divestment from Predatory Education argument makes a compelling case that investing in companies like PXED — or in loan servicers that profit from student debt — is not just risky, but morally indefensible. According to HEI, institutional investors (including university endowments, pension funds, and foundations) are complicit in a system that monetizes students’ aspirations and perpetuates financial harm. 

    For investors, the message is clear: Phoenix is not merely an education play — it’s a high-stakes, ethically fraught extraction machine built on a legacy of indebtedness and regulatory vulnerability.

    Unless PXED commits to real transparency, independent reporting on student outcomes, and accountability mechanisms — including reparations or debt relief — it should be approached not as a social-growth story, but as a dangerous gamble.

    Sources

    • HEI. “Divestment from Predatory Education Stocks: A Moral Imperative.” Higher Education Inquirer

    • HEI. “The College Meltdown Index: Profiting from the Wreckage of American Higher Education.” Higher Education Inquirer

    • HEI. “What Do the University of Phoenix and Risepoint Have in Common? The Answer Is a Compelling Story of Greed and Politics.” Higher Education Inquirer

    • HEI. “University of Phoenix Uses ‘Sandwich Moms’ to Sell a Debt Trap.” Higher Education Inquirer

    • HEI. “New Data Show Nearly a Million University of Phoenix Debtors Owe $21.6 Billion.” Higher Education

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  • Apollo Wants Investors to Buy Back the University of Phoenix. They Shouldn’t. (David Halperin)

    Apollo Wants Investors to Buy Back the University of Phoenix. They Shouldn’t. (David Halperin)

    Having failed to complete deals to sell the troubled giant for-profit University of Phoenix to major state universities in Arkansas and Idaho — after people in those states got cold feet — the school’s owner, private equity behemoth Apollo Global Management, just before the holiday weekend announced an initial public offering for the school. 

    Phoenix’s parent company had been publicly traded until AGM and two other firms took the company private in 2017. Now they have gone back to Wall Street to re-sell the school to investors. 

    But should investors want to buy this operation? The presence of the heavily-advertised University of Phoenix in the college market has been bad for U.S. students, taxpayers, and the economy, because it has led many students to enroll in a school that often deceives people, and often leaves students with heavy debts and without the careers they sought — when they could be using taxpayer support and their own money to enroll in better value programs. 

    Moral and macro-economic concerns aside, it’s not even clear that buying Phoenix will be good for investor bottom lines. 

    The University of Phoenix, which has received tens of billions from federal taxpayers for student grants and loans — at times more than $2 billion in a single year — has faced numerous law enforcement investigations and actions for its deceptive recruiting of veterans, military service members, and other students across the country.

    Most notably, in 2019, Phoenix reached a record $191 million settlement with the Federal Trade Commission, which claimed the school had lured students with false claims about partnerships with major employers. Phoenix ran ads falsely indicating that the school had deals with companies including AT&T, Yahoo!, Microsoft, Twitter, and the American Red Cross to create job opportunities for its students and tailor school programs for such jobs, when that was not the case. The deceptive claim went to the heart of prospective students’ motivations for enrolling. Andrew Smith, then the Director of the FTC’s Bureau of Consumer Protection, said at the time of the agreement, “Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist.”

    And last year California’s attorney general reached a settlement with Phoenix to resolve allegations that the school’s aggressive recruitment tactics directed at military students violated consumer protection laws. 

    The now almost entirely online school did a two-year dance with the University of Idaho that drew immense criticism from lawmakers, executive branch officials, newspaper editorial boards, and others in that state before the deal was finally called off in June.

    Bloomberg reported earlier this year that an IPO might value the University of Phoenix operation, which had $810 million in revenue for 2023-24 (81 percent of that from federal taxpayer dollars), at $1.5 billion to $1.7 billion. And the new Trump administration has signaled in multiple ways that it is reducing protections for students against predatory college abuses, a development that may make investors more willing to buy a piece of a school like Phoenix.

    But new federal legislation requires schools to provide some financial value for students. Also, state attorneys general, who have curbed and even slayed a number of for-profit giants over a decade, are watching; the media understands this issue, as it did not in the last wild west era fifteen years ago; and more potential students are wary after a generation of abuses.

    So it may end up being much tougher to thrive in the predatory college business than some might think. 

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