SALEM – The nation’s largest for-profit college, University of Phoenix, is getting sued by Oregon for allegedly misleading students and the state on how it deals with student loans.
Karen Johnson said she insisted on paying for classes herself when she signed up at the University of Phoenix. Weeks later, she learned the school had taken out a loan in her name and sent her a check.
She claims the immediately sent the money back but the school sent her name to the collections department, hurting her credit rating.
“It’s keeping us down when we’re trying to make a better life and do better things,” Johnson said, frustrated.
Oregon’s Attorney General said Johnson has not been the only student with serious complaints.
“An enormous number of people in this recession are going to these schools trying to get a leg up and unfortunately a very large percentage of these programs are not doing much good,” said Oregon AG John Kroger. “They're actually sending people backwards instead of moving them forwards."
Kroger added that the University of Phoenix has been misleading investors as well by “cooking the books,” or in other words, altering financial statements.
Oregon is suing the university for $10 million and Kroger said he hopes other states will join his class-action lawsuit.
(KGW reporter Ed Teachout contributed to this article.)