The owner of University of Phoenix is halting mandatory arbitration with students who claim to have been deceived or defrauded by the school.

Apollo Education, which operates University of Phoenix and Western International University, announced that it will no longer include mandatory arbitration clauses in its arbitration agreements effective July1.

Previously, concerned students and graduates at the schools found that their recourse against Apollo was arbitration -- a private, out-of-court system for dispute resolution that often is more expensive and tilted heavily in favor of major corporations.

Arbitration clauses have received increasing scrutiny by the U.S. Department of Education and the federal Consumer Financial Protection Bureau
University of Phoenix has experienced steep enrollment declines, dropping from a height of 460,000 students at its campuses five years ago to 213,000 now, according to statistics released by its parent company, Apollo Education Corp.
CNN Money has stated that "Apollo's fast fall is another sign of the decline in for-profit education . . . Once a cash cow industry, for-profit education companies have struggled to overcome criticism of the quality of its education and the costs.  They're the sore spot in the national debate about value of higher education."

The nation's largest for-profit school, University of Phoenix, is seeking to dismiss a class action lawsuit alleging that the university engages in fraudulent business practices.
As reported by Legal Newsline, the university contends that the lawsuit cannot proceed for reasons including that it alleges fraud based on future events, such as assurance of job placement after graduation, that cannot support a claim.  
According to Legal Newsline:
"Ashley Paredes, a 22-year-old mother of three, is seeking class action status for students who enrolled at the university, borrowed tens of thousands of dollars in federal loans and yet found themselves unemployed with allegedly worthless college credits.
"Paredes enrolled at the University of Phoenix after, she claims, she was promised her associate degree would allow her to continue on to earn her bachelor’s and master’s degrees and work as a licensed counselor.
 "The lawsuit alleges the recruiters for the college promised prospective students that the credits earned at the school would transfer to comparable programs at schools such as California State University."
The case is currently pending in the United States District Court for the Central District of California.