HEI 2025: Over 1.4 Million Annual Page Views From Readers Across the Globe

Over 1.4 million page views from readers across the globe in 2025 reveal a simple but terrifying truth: the promise of a college degree is collapsing before our eyes. Cyber breaches, student debt spirals, for-profit exploitation, and failing oversight have combined to create a system that enriches the few while leaving millions exposed to financial, social, and personal risk. From elite endowments hoarding wealth to underfunded community colleges struggling to survive, higher education is no longer a ladder to opportunity—it is a battleground where power, profit, and policy collide. HEI’s reporting this year has lifted the veil on the forces reshaping American education, revealing a crisis that is urgent, systemic, and global.

Our most-read investigations laid bare a stark reality: a college degree no longer guarantees financial security. Graduates carry crushing debt even as wages stagnate and job markets tighten. Families struggle under the weight of rising costs, while communities confront the fallout of institutions that promise prosperity but deliver instability. The working-class recession is real, and higher education has become both a reflection and a driver of it.

Institutions themselves are showing alarming fragility. The University of Phoenix cyber breach highlighted how even the largest for-profit entities can collapse under operational mismanagement and inadequate oversight. Schools flagged for Heightened Cash Monitoring by the Department of Education illustrate a wider pattern of financial and administrative vulnerability. When governance fails, students suffer, public dollars are jeopardized, and trust in the system erodes.

Profit imperatives have reshaped the very mission of higher education. Fraudulent FAFSA claims, opaque financial practices, and political donations from for-profit entities reveal a sector increasingly beholden to investors and corporate interests. In this bifurcated system, elite universities consolidate wealth while underfunded community colleges, HBCUs, and MSIs struggle to survive. The promise of equal opportunity is under assault, replaced by a marketplace that privileges profit over learning.

HEI has also cast a global lens on these inequities. From Latin America to U.S. territories, higher education is entangled with political power, economic extraction, and social stratification. Internationally, the same forces of exploitation and inequity shape students’ futures, underscoring that the crisis is not merely domestic but systemic and global.

Yet HEI’s work does not end with diagnosis. Solutions are emerging. Federal oversight and transparency must increase, debt relief is imperative, cybersecurity and governance reforms are urgent, and reinvestment in historically underfunded institutions is critical. These measures are necessary to restore integrity and public trust in a system that has long promised more than it delivers.

As we enter 2026, HEI remains committed to relentless investigation and fearless reporting. We will continue to expose failures, hold power accountable, and illuminate both the inequities and the opportunities within higher education. Our 1.4 million page views from readers across the globe in 2025 reflect the urgent need for this work. Higher education is at a crossroads. Informed scrutiny, persistent inquiry, and uncompromising reporting are the only way forward. Hope is limited but not lost. With scrutiny, advocacy, and decisive action, higher education can reclaim its promise as a public good rather than a profit-driven system that leaves millions behind.

Sources and References

Higher Education Inquirer, various articles, 2025. U.S. Department of Education Heightened Cash Monitoring lists, 2025. University of Phoenix cyber breach reports, 2025. Investigations into FAFSA fraud and for-profit college practices, HEI 2025. Global higher education inequality studies, 2025.

Cybercrime, Hypocrisy, and the Geopolitics of Blame: Why Russia Isn’t Always the Enemy

In the summer of 2025, the CLOP hacking group—operating from Russia—exploited weaknesses at the University of Phoenix, exposing sensitive data on thousands of students and staff. The breach was devastating, yet Russia was not officially condemned as an adversary.

The contrast with U.S. policy toward countries like Venezuela is striking. Venezuela faces crippling sanctions, economic isolation, and constant political pressure under the banner of protecting democracy and human rights. Meanwhile, Russian-based cybercriminals are allowed to inflict real harm on U.S. institutions with little official pushback. The reason, officials say, is a lack of direct evidence tying these attacks to the Russian state. But the discrepancy reveals a deeper hypocrisy: punitive measures are applied selectively, often based on geopolitical convenience rather than consistent principles.

CLOP-style attacks exploit vulnerabilities in U.S. institutions. Universities, especially those operating on outdated IT systems and under private equity pressures, are frequent targets. Students—many already burdened by debt and systemic inequities—bear the brunt when personal data is exposed. Yet the broader conversation rarely extends to foreign actors who take advantage of these weaknesses or to the structural failures within U.S. education.

Venezuela’s citizens suffer sanctions and economic hardship, while Russian cybercriminals operate from the safety of a country that tolerates them, so long as domestic interests remain untouched. This double standard undermines the credibility of U.S. claims to principled leadership and exposes the uneven moral framework guiding foreign policy.

Higher education becomes a battleground in this selective application of power. Cyberattacks, fraud, and systemic negligence converge to threaten students and faculty, revealing the real victims of international hypocrisy. Protecting U.S. institutions requires acknowledging both the foreign actors who exploit weaknesses and the domestic policies and practices that leave them vulnerable.

The CLOP breach is more than a single incident—it is a reflection of a system that punishes some nations for internal crises while tolerating damage inflicted by others on critical domestic infrastructure. Until U.S. policy addresses both sides of this equation, the cost will continue to fall on the most vulnerable: the students, staff, and faculty caught in the crossfire.

Sources: U.S. Department of Education reports; investigative journalism on CLOP and Russian cybercrime; analyses of U.S.-Venezuela sanctions and policy. 

University of Phoenix, Oracle, and the Russian Cybercrime Crisis That Should Never Have Been Allowed to Happen

The University of Phoenix breach is more than another entry in the long list of attacks on higher education. It is the clearest evidence yet of how private equity, aging enterprise software, and institutional neglect have converged to create a catastrophic cybersecurity landscape across American colleges and universities. What happened in the summer of 2025 was not an unavoidable act of foreign aggression. It was the culmination of years of cost-cutting, inadequate oversight, and a misplaced faith in legacy vendors that no longer control their own risks.

The story begins with the Russian-speaking Clop cyber-extortion group, one of the most sophisticated data-theft organizations operating today. In early August, Clop quietly began exploiting a previously unknown vulnerability in Oracle’s E-Business Suite, a platform widely used for payroll, procurement, student employment, vendor relations, and financial aid administration. Oracle’s EBS system, decades old and deeply embedded across higher education, was never designed for modern threat environments. As soon as Clop identified the flaw—later assigned CVE-2025-61882—the group launched a coordinated campaign that compromised dozens of major institutions before Oracle even acknowledged the problem.

Among the most heavily affected institutions was the University of Phoenix. Attackers gained access to administrative systems and exfiltrated highly sensitive data: names, Social Security numbers, bank accounts, routing numbers, vendor records, and financial-aid related information belonging to students, faculty, staff, and contractors. The breach took place in August, but Phoenix did not disclose the incident until November 21, and only after Clop publicly listed the university on its extortion site. Even after forced disclosure, Phoenix offered only vague assurances about “unauthorized access” and refused to provide concrete numbers or a full accounting of what had been stolen.

Phoenix was not alone. Harvard University confirmed that Clop had stolen more than a terabyte of data from its Oracle systems. Dartmouth College acknowledged that personal and financial information for more than a thousand individuals had been accessed, though the total is almost certainly much higher. At the University of Pennsylvania, administrators said only that unauthorized access had occurred, declining to detail the scale. What links these incidents is not prestige, geography, or mission. It is dependency on Oracle’s aging administrative software and a sector-wide failure to adapt to a threat environment dominated by globally coordinated cybercrime operations.

But Phoenix stands apart from its peers because Phoenix, Apollo Global Management, and The Vistria Group should have known better. This institution has long operated at a scale more comparable to a financial-services company than a school. It handles vast volumes of sensitive data connected to federal student aid, identity verification, private loans, tuition reimbursement programs, and employer partnerships. A university with this profile should have been treating cybersecurity as a core institutional function, not an afterthought.

Apollo Global Management, which owned Phoenix during a period of enrollment decline and regulatory exposure, was fully aware of the vulnerabilities associated with online enrollment, financial-aid processing, and aging ERP infrastructure. Apollo’s business model is built on risk analysis and mitigation, yet it consistently underinvested in sustainable IT modernization while focusing on financial engineering and cost extraction. Phoenix emerged from Apollo’s ownership with significant technical debt and a compliance culture centered on limiting institutional liability rather than strengthening institutional defenses.

When The Vistria Group, through Phoenix Education Partners, acquired the university, it promised a new era of stability and digital transformation. Instead, it delivered a familiar private-equity formula: leaner operations, staff reductions, increased reliance on contractors, and deferred infrastructure investment. All of this occurred as ransomware groups such as Clop, LockBit, BlackCat, and Vice Society were escalating attacks on universities. The MOVEit crisis, the Accellion breach, and dozens of ransomware incidents had already demonstrated that higher education was an increasingly profitable target. Vistria had every signal necessary to understand the stakes, yet Phoenix entered the summer of 2025 with outdated Oracle systems, slow patch deployment, inadequate monitoring, and minimal segmentation between financial-aid and general administrative systems.

The breach was not a surprise. It was an inevitability. A university holding the sensitive financial and identity data of hundreds of thousands of current and former students, staff, and vendors cannot protect itself with minimal investment and outdated architecture. When Clop exploited Oracle’s flaw, Phoenix lacked the tools to detect lateral movement early, the expertise to identify unusual activity quickly, and the governance structure to respond decisively. The institution did not discover the breach on its own; it reacted only when a criminal syndicate announced its presence to the world.

This incident exposes a broader truth about higher education infrastructure in the United States. Universities have grown dependent on enterprise vendors whose systems are increasingly brittle and whose security models no longer meet contemporary requirements. Meanwhile, private-equity owners emphasize cost containment and short-term returns over long-term stability. The University of Phoenix breach is the result of those conditions converging with a global cybercrime ecosystem that is more organized, better funded, and more technically agile than the institutions it targets.

Students, faculty, staff, and vendors will bear the consequences for years. Many will face identity theft, fraudulent activity, and the lingering fear that their most sensitive information is circulating indefinitely on criminal marketplaces. Phoenix, like other affected institutions, will offer credit monitoring and generic assurances. But the public disclosures arrived too late, and the underlying failures were years in the making.

Phoenix should have known better.
Apollo Global Management should have known better.
The Vistria Group should have known better.
And American higher education should finally recognize that it can no longer treat cybersecurity as a line-item expense. It is now one of the central pillars of institutional survival.

Sources
Bleeping Computer
Security Affairs
The Register
CPO Magazine
The Record
University of Phoenix breach notifications
Clop leak site monitoring data

HEI Investigation: ED FOIA Digging Up Suspected FAFSA Fraud at the University of Phoenix

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The Higher Education Inquirer (HEI) is requesting:

1. All OIG investigations, reviews, case summaries, fraud-ring investigations, or closed case files (including referrals from Federal Student Aid) from January 1, 2008 to the present that involve or reference:

*the University of Phoenix (any campus or online division),

*Apollo Group, Apollo Education Group, or Phoenix Education Partners (PXED), or

*any individual or organized group that used the University of Phoenix to commit FAFSA fraud, including but not limited to identity theft, false FAFSA applications, fabricated enrollment for Title IV eligibility, Pell-runner schemes, or fraud connected to distance-education programs.

2. Any OIG audit reports, program reviews, draft findings, risk assessments, or internal memoranda from January 1, 2008 to the present that evaluate the vulnerability of the University of Phoenix to:

*FAFSA fraud

*Pell Grant fraud

*Title IV fraud rings

*identity-based financial aid fraud

*“Pell runner” activity

*online/distance-education fraud schemes linked to FAFSA misuse.

3. All institutional-level fraud-referral files, Student Aid Reports (SARs) flagged for suspected fraud, or records of suspicious-activity referrals submitted to OIG or generated internally by OIG relating to FAFSA fraud or suspected FAFSA manipulation at the University of Phoenix (January 1, 2008–present).

4. Any aggregate or institution-specific data summaries listing the number of FAFSA-related fraud referrals, confirmed FAFSA fraud cases, or Title IV fraud-ring participants associated with the University of Phoenix.

5. All communications between OIG and Federal Student Aid (FSA) from January 1, 2008 to the present that reference the University of Phoenix in connection with:

*FAFSA fraud

*Pell Grant fraud 

*fraud-ring activity

*suspected manipulation of federal aid eligibility, or abnormal application-risk patterns associated with University of Phoenix applicants

This request is limited to closed investigations and final reports to avoid any interference with ongoing law-enforcement matters. If portions of any records must be withheld, please release all reasonably segregable non-exempt material. (Date Range for Record Search: From 12/31/2008 To 12/04/2025)

Hyper-Deregulation and the College Meltdown

In March 2025, Studio Enterprise—the online program manager behind South University—published an article titled “A New Era for Higher Education: Embracing Deregulation Amid the DOE’s Transformation.” Written in anticipation of a shifting political landscape, the article framed coming deregulation as an “opportunity” for flexibility and innovation. Studio Enterprise CEO Bryan Newman presented the moment as a chance for institutions and their contractors to do more with fewer federal constraints, implying that regulatory retreat would improve student choice and institutional agility.

What was framed as a strategic easing of oversight has instead arrived as a form of collapse. By late 2025, the U.S. Department of Education has become, in functional terms, a zombie agency—still existing on paper, but stripped of its capacity to regulate, enforce, or even communicate. Consumer protection, accreditation monitoring, program review, financial oversight, and FOIA responses have slowed or stopped entirely. The agency is walking, but no longer awake.

This vacuum has emboldened not only online program managers like Studio Enterprise and giants like 2U, but also a wide array of entities that rely on federal inaction to profit from students. The University of Phoenix—long emblematic of regulatory cat-and-mouse games in the for-profit sector—now faces minimal scrutiny, continuing to recruit aggressively while the federal watchdog sleeps. Elite universities contracting with 2U continue to launch expensive online degrees and certificates whose marketing and outcomes would once have been examined more closely.

Student loan servicers and private lenders have also moved quickly to capitalize on the chaos. Companies like Aidvantage (Maximus), Nelnet, and MOHELA now operate in an environment where enforcement actions, compliance reviews, and borrower complaint investigations have slowed to a near standstill. Servicers once accused of steering borrowers into costly forbearances or mishandling IDR accounts now face fewer barriers and far less public oversight. The dismantling of the Department has also disrupted the small channels borrowers once had for correcting servicing errors or disputing inaccurate records.

Private lenders—including Sallie Mae, Navient, and a growing constellation of fintech-style student loan companies—have seized the opportunity to expand high-interest refinance and private loan products. Without active federal oversight, marketing claims, credit evaluation practices, and default-related consequences have become increasingly opaque. Borrowers with limited financial literacy or unstable incomes are again being targeted with products that resemble the subprime boom of the early 2010s, but with even fewer regulatory guardrails.

Hyper-deregulation has also destabilized the federal loan system itself. Processing backlogs have grown. Borrower defense and closed-school discharge petitions sit in limbo. Decisions are delayed, reversed, or ignored. Automated notices go out while human review has hollowed out entirely. Students struggling with servicer errors find there is no functioning authority to appeal to—not even the already stretched ombudsman’s office, which is now overwhelmed and under-directed.

Across the sector, the same pattern is visible: institutions and corporations functioning without meaningful oversight. OPMs determine academic structures that universities should control. Lead generators push deceptive marketing campaigns with impunity. Universities desperate for enrollment sign long-term revenue-sharing deals without public transparency. Servicers mismanage accounts and communications while borrowers bear the consequences. Private lenders accelerate their expansion into communities least able to withstand financial harm.

Students feel the effect first and most painfully. They face rising costs, misleading claims, aggressive recruitment, and a federal loan system that can no longer assure accuracy or fairness. The collapse of oversight is not theoretical. It manifests in missed payments, lost paperwork, incorrect balances, unresolved appeals, and ballooning debt. For many, there is now no reliable path to recourse.

Studio Enterprise saw deregulation coming. What it left unsaid is that removing federal guardrails does not produce innovation. It produces confusion, predation, and unequal power. Hyper-deregulation rewards those who operate in the shadows—OPMs, for-profit chains, high-fee servicers, and private lenders—while those seeking education and mobility carry the burden.

This moment is not an evolution. It is an abandonment. Higher education is drifting into an environment where profit extraction flourishes while public protection evaporates. Unless new sources of oversight emerge—federal, state, journalistic, or civic—the most vulnerable students will continue to pay the highest price for the disappearance of the referee.

---

Sources

Studio Enterprise, A New Era for Higher Education: Embracing Deregulation Amid the DOE’s Transformation (March 2025).
HEI archives on OPMs, for-profit colleges, and regulatory capture (2010–2025).
Public reporting and advocacy analyses on student loan servicers, including Navient, MOHELA, Nelnet, Aidvantage/Maximus, and Sallie Mae (2015–2025).
FOIA request logs, non-responses, and stalled borrower relief cases documented by HEI and partner organizations (2024–2025).
Federal higher education enforcement trends, 2023–2025.

HEI Investigation: FAFSA (Financial Aid) Fraud

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The Higher Education Inquirer (HEI) is requesting all emails, memos, and meeting notes between FSA leadership and ED leadership from January 2022–present referencing fraudulent FAFSA submissions, identity theft, synthetic identities, or the need for strengthened ID verification. (Date Range for Record Search: From 01/10/2022 To 12/02/2025)

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The Higher Education Inquirer (HEI) is requesting from the FSA Office of the Chief Information Officer, all security assessments, vulnerability reports, or risk analyses referencing the FAFSA processing system (FPS), identity verification, or bot-driven application spikes from 2020–present. This includes reports about warnings about bots, concerns about insufficient authentication, and breaches or near-breaches that the public never hears about.  (Date Range for Record Search: From 01/10/2020 To 12/02/2025)

26-00777-F  

The Higher Education Inquirer (HEI) is asking for any and all FSA records, reports, data dashboards, spreadsheets, audits, or communications from January 2023–present that track or analyze fraudulent FAFSA submissions, including synthetic identities, ghost students, identity verification failures, or suspected fraud rings. This includes documents prepared for FSA leadership, ED leadership, OMB, or the OIG. (Date Range for Record Search: From 01/01/2023 To 12/02/2025)

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The Higher Education Inquirer (HEI) is requesting all emails from the US Department of Education regarding selling off the student loan portfolio.   (Date Range for Record Search: From 01/10/2025 To 11/27/2025)

26-00023-F-IG  

The Higher Education Inquirer (HEI) is requesting any and all correspondence between the ED-OIG and the University of Phoenix regarding unusual or suspicious FAFSA applications from 1/1/2020 and 11/26/2025 (Date Range for Record Search: From 01/01/2020 To 11/26/2025)

26-00709-F  

The Higher Education Inquirer is requesting any and all email correspondence between the US Department of Education and the Thompson Coburn Law Firm from January 6, 2025 to November 24, 2025.  We are particularly interested in the following areas related to higher education:
Gainful Employment
Bare Minimum Rule
Borrower Defense to Repayment
Student Loan Forgiveness
Title IX
False Claims Act
Federal Funding Freeze Litigation
DEI Executive Orders Litigation, the Dear Colleague Letter Litigation, and DOJ’s July 2025 Guidance on Unlawful Discrimination
Executive Order 14242 Directing the Closure of ED
Grant Termination
Rate Cap Policy Litigation
Student and Exchange Visitor Program Litigation
Legality of Nationwide Injunctions
Program Participation Agreement Signatory Litigation (Date Range for Record Search: From 01/06/2025 To 11/24/2025)

26-00697-F

The Higher Education Inquirer (HEI) is requesting any and all correspondence pertaining to "unusual" or "suspicious" activity regarding FAFSA applications involving the University of Phoenix.  Phoenix Education Partners CEO Chris Lynne has recently acknowledged this issue.   (Date Range for Record Search: From 01/01/2024 To 11/23/2025)

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University of Phoenix’s Russian Cyber Breach: Another Symptom of a System in Decline

[Editor's note: The Higher Education Inquirer has been tracking cybercrime and FAFSA fraud in higher education. In August, we covered ghost students at a number of schools. It's notable that the University of Phoenix identified the Russian cybersecurity breach the day after its parent company's Earnings Call.]

The University of Phoenix has disclosed a major Russian cyber breach that again raises serious questions about governance, infrastructure, and public accountability at one of the most scrutinized institutions in American higher education. According to the institution, the intrusion began in August 2025, when attackers exploited a zero-day vulnerability in Oracle’s E-Business Suite, the enterprise financial system the university uses to manage sensitive operational and personal data.

The breach went undetected for months. By the time University of Phoenix identified the incident on November 21, 2025, the attackers had already siphoned personal and financial information belonging to students, faculty, staff, and suppliers. The university has confirmed that the attack is part of an extortion campaign associated with the Clop ransomware gang, known for targeting large organizations running legacy Oracle and MOVEit systems.

While the university has emphasized that it is still “reviewing the impacted data,” what that means in practice is that thousands of people now face an extended period of uncertainty, waiting to learn what information—Social Security numbers, banking records, home addresses, transcripts, or vendor payment details—may now be circulating beyond the institution’s control. Because the compromised Oracle EBS platform sits at the center of finance, payroll, procurement, and accounts receivable, the range of possible exposure is significant.

The breach intersects with a larger pattern. University of Phoenix has long branded itself as a technologically adept institution serving working adults, yet this incident lays bare the vulnerabilities created by years of cost-cutting, outsourcing, and reliance on aging software. This model—common across the for-profit sector—treats cybersecurity as a compliance box rather than a core operational priority. When institutions depend on brittle infrastructure while managing large volumes of sensitive data, the result is predictable: preventable failures that impose real harm on people with little recourse.

Higher education, especially the for-profit sector, has chronically underinvested in secure, modernized systems even as it continues to collect data from some of the country’s most economically vulnerable students. The University of Phoenix breach underscores this contradiction. An institution with a long record of federal investigations, poor student outcomes, and aggressive recruiting now faces yet another crisis of trust—one that cannot be brushed aside with templated notifications or promises of future improvements.

Whether this breach becomes a catalyst for reform is uncertain. Much depends on how transparent the university chooses to be, whether it fully informs regulatory agencies, and whether affected individuals receive more than form letters and a year of credit monitoring. If prior incidents across the sector are any indication, meaningful accountability may once again be elusive.

But the stakes remain high. Breaches of this scale do not simply reflect technical flaws; they reflect policy choices. The people who pay the price are not executives or investors but students, staff, faculty, and contractors whose data is now at risk—individuals who entrusted the university with information essential to their livelihoods.

Sources
University of Phoenix public disclosure, November 2025
Oracle E-Business Suite vulnerability reporting
Clop ransomware gang activity reports
Higher education cybersecurity incident archives

Is the Federal Trade Commission FOIA program still in operation?

In light of recent developments at the Federal Trade Commission under the current administration — including staffing reductions and a temporary 2025 government shutdown — many observers and researchers are questioning whether the FTC’s Freedom of Information Act (FOIA) program is still functioning. The answer remains: yes — the FOIA program is still formally operational, but its capacity and responsiveness appear diminished under current conditions.

The FTC continues to administer FOIA through its Office of General Counsel (OGC), which processes all FOIA requests. As of the 2024 fiscal year, the FTC’s FOIA Unit comprised four attorneys, five government-information specialists, and one paralegal, with occasional support from contractors and other staff. In that year, the agency processed 1,919 requests (and 29 appeals), up from 1,812 in 2023. The agency’s publicly available “FOIA Handbook,” last updated in April 2025, continues to outline how requests should be submitted, what records are on the public record, and how exemptions are applied.

The FTC’s website still provides instructions for submitting a FOIA request via its online portal, email, fax, or mail. That means requests remain legally eligible — including those related to for-profit colleges, student loan servicers, institutional behavior, complaints, or decision-making memos.

However, HEI’s own experience in 2025 highlights some of the challenges with the FTC’s current FOIA responsiveness. In January 2025, we submitted a FOIA request asking for a record of complaints against the University of Phoenix, but have no record of a response. In August 2025 we did receive a substantive response related to complaints regarding a student loan company, but the number of complaints appeared lower than we expected. On November 30, 2025, we received an automated response to our FOIA request about AidVantage, a student loan servicer and subsidiary of Maximus. While we did receive a reply, it reflected a stale message stating they would respond after the government reopened — even though the government had reopened on November 13.

These examples illustrate that while FOIA is formally operational, actual responsiveness has deteriorated. For years, HEI had a good relationship with the FTC, obtaining critical information for a number of investigations in a timely manner. It remains to be seen whether that reliability can be restored.

Compounding the issue are broader staffing and operational changes at the FTC. In testimony before Congress in May 2025, FTC Chair Andrew N. Ferguson reported that the agency began FY 2025 with about 1,315 personnel but had reduced to 1,221 full-time staff, with plans to potentially reduce further to around 1,100 — the lowest level in a decade. These staffing reductions coincide with scaled-back discretionary activities, such as rulemaking, public guidance publishing, and outreach. During the October 2025 lapse in government funding, the FTC announced that FOIA requests could still be submitted but would not be processed until appropriations resumed.

For researchers, journalists, and advocates — including those pursuing records related to for-profit colleges, student loan servicers, regulatory decisions, or historical investigations — FOIA remains a legally viable tool. The path is open, though response times are slower, staff resources are constrained, and releases may be more limited, especially for sensitive or exempt material.

Sources

Congressional budget testimony on FTC staffing and budget: https://www.congress.gov/119/meeting/house/118225/witnesses/HHRG-119-AP23-Wstate-FergusonA-20250515.pdf

FTC FOIA Handbook (April 2025): https://www.ftc.gov/system/files/ftc_gov/pdf/FOIA-Handbook-April-2025.pdf

FTC 2024 Chief FOIA Officer Report (staffing, request volume): https://www.ftc.gov/system/files/ftc_gov/pdf/chief-foia-officer-report-fy2024.pdf

FTC website instructions for submitting FOIA requests: https://www.ftc.gov/foia/make-foia-request

FTC 2025 shutdown plan showing FOIA processing paused during funding lapse: https://www.ftc.gov/ftc-is-closed

Reporting on FTC removal of business-guidance blogs in 2025: https://www.wired.com/story/federal-trade-commission-removed-blogs-critical-of-ai-amazon-microsoft/

PXED Throws US Department of Education Under the Bus Regarding Enrollment Fraud

[Editor's note: The Higher Education Inquirer has requested all Department of Education correspondence related to "unusual" or "suspicious" enrollment regarding the University of Phoenix.]   

Phoenix Education Partners (PXED), parent company of the University of Phoenix, used its latest earnings call to advance a familiar narrative: when things go wrong, blame the U.S. Department of Education. This time, CEO Chris Lynne positioned ED as the primary culprit behind the suspicious-enrollment surge that distorted PXED’s numbers over the past year.

The exchange began when Goldman Sachs analyst George Tong asked the question PXED tried to sidestep throughout its IPO process: How much of PXED’s slowing FY2026 enrollment growth is due to fraud controls, and how much of it is due to friction created for legitimate students? And, crucially, what prevents these distortions from resurfacing in the next cycle?

Lynne offered no numbers. Instead, he pivoted to a sweeping explanation of PXED’s “advanced algorithms” and internal control systems—systems so forceful that they immediately block applicants once certain thresholds are hit, even when PXED cannot determine whether they’ve flagged a real student or a bad actor.

But once the CEO finished describing these internal measures, he returned to the real point he wanted to deliver to Wall Street: this is the Department of Education’s fault, not PXED’s.

According to Lynne, the “root” cause was a breakdown in ED’s identity-verification controls tied to the troubled rollout of the new FAFSA. The Department “publicly acknowledged” the failure, Lynne said, and PXED executives met with ED in September to confirm that the government finally has “a good handle on this.” In Lynne’s telling, PXED is the responsible party cleaning up a federal mess.

What this framing ignores is everything that came before. PXED and its predecessor, the University of Phoenix, have long histories of enrollment-integrity problems that predate the FAFSA meltdown by more than a decade. When Lynne says his algorithms “cleaned up” the funnel after being moved to the top of the application process, what he really means is that PXED used its own filters—its own black-box controls—to decide which students were worth staff time and which were not.

And PXED quietly admitted the cost. The verification loops and algorithmic filters caught many real students, blocking or delaying their enrollment and layering additional obstacles onto people who already face the steepest barriers in higher education. Lynne dismissed this as mere “friction”—a small price to pay for cleaner numbers.

But the larger problem is structural. For-profit systems built on volume rely on conversions, throughput, and funnel efficiency. When that model is threatened, the instinct is not to repair student-facing systems—it's to blame the government, tighten internal controls, and preserve the revenue pipeline. PXED’s decision to throw ED under the bus fits that pattern exactly.

The real story isn’t that the Department of Education made serious mistakes in rolling out the new FAFSA—mistakes it has acknowledged. The real story is how quickly companies like PXED use those failures as a shield, deflecting accountability for their own long-standing recruitment practices and quietly punishing the very students they claim to serve.

Phoenix Education Partners, FAFSA Fraud, and the Familiar Dance of Blame

When Phoenix Education Partners (PXED) CEO Chris Lynne publicly blamed the U.S. Department of Education for missing fraud in FAFSA applications—fraud that allowed the University of Phoenix to enroll individuals engaged in financial-aid misconduct—he likely hoped to redirect scrutiny away from his own shop. Instead, the maneuver sent up a flare. For many observers of the for-profit college sector, it felt like the return of a well-worn tactic: deflect, distract, and deny responsibility until the heat dies down.

The pivot toward blaming the Department of Education does not merely look defensive; it echoes a pattern that helped bring down an entire generation of predatory schools. And it raises a simple question: why is PXED responding like institutions that have something to hide?


The Old Script, Updated

The University of Phoenix, under PXED’s ownership, carries not just a long memory of investigations and settlements but a structural DNA shaped by years of aggressive enrollment management, marketing overreach, and high-pressure tactics. When the industry was confronted with evidence of systemic abuses—lying about job placement, enrolling ineligible students, manipulating financial-aid rules—the typical industry defense was to claim that problems were caused by bad actors, by misinterpreted regulations, or by a sluggish and incompetent Department of Education.

Those excuses were not convincing then, and they ring even more hollow now.

If individuals involved in financial-aid fraud managed to slip into the system, an institution with PXED’s history should be the first to strengthen internal controls, not pass the buck. Schools are required under federal law to verify eligibility, prevent fraud, and monitor suspicious patterns. Pretending that ED is solely responsible ignores the compliance structure PXED is obligated—by statute—to maintain.

Why Blame-Shifting Looks So Suspicious

Instead of demonstrating transparency or releasing information about internal controls that failed, PXED’s leadership has opted for a public relations gambit: blame the regulator. This raises several concerns.

First, shifting responsibility before releasing evidence suggests that PXED may be more focused on reputational management than on institutional accountability. If the organization’s processes were sound, those facts would speak louder—and more credibly—than an accusatory press statement.

Second, the posture is déjà vu for people who have tracked the sector for decades. Corinthian Colleges, ITT Tech, Education Management Corp., and Career Education Corporation all blamed ED at various stages of their collapses. In each case, deflection became part of the pattern that preceded deeper revelations of systemic abuse.

When PXED’s CEO adopts similar rhetoric, observers reasonably wonder whether history is repeating itself—again.

Finally, PXED’s argument undermines trust at a moment when the University of Phoenix is already under skepticism from accreditors, policymakers, student-borrower advocates, and the public. Instead of strengthening compliance, PXED’s messaging signals defensiveness. Institutions with nothing to hide usually take a different approach.

The Structural Issues PXED Doesn’t Want to Discuss

PXED acquired the University of Phoenix with promises of modernization, stabilization, and responsible stewardship. But beneath the marketing, core challenges remain:

A business model dependent on federal aid. The more a school relies on federal dollars, the stronger its responsibility to prevent fraud—not the weaker.

A compliance culture shaped by profit pressure. For-profit education has repeatedly shown how financial incentives can distort admissions and oversight.

A credibility deficit. PXED took over an institution known internationally for deceptive advertising and financial-aid abuses. Blaming ED only magnifies the perception that nothing has fundamentally changed.

A fragile regulatory environment. With oversight tightening and student-protection rules returning, PXED cannot afford to gesture toward the old for-profit playbook. Doing so suggests they are trying to manage optics instead of outcomes.

What Accountability Would Look Like

If PXED wanted to demonstrate leadership rather than defensiveness, a different response was available:

• Conduct and publish a full internal review of financial-aid intake processes
• Outline steps to prevent enrollment of fraudulent actors
• Acknowledge institutional lapses—and explain how they occurred
• Invite independent audits rather than blaming federal partners
• Demonstrate an understanding of fiduciary obligations to students and taxpayers

This is the standard expected of Title IV institutions. It is also the standard PXED insists they meet.

A Familiar Pattern at a Familiar Institution

Every moment of pressure reveals something about institutional culture. PXED’s choice to immediately fault the Department of Education—without presenting evidence of its own vigilance—suggests that the company may still be operating according to the old Phoenix playbook: when in doubt, blame someone else.

But in 2025, the public, regulators, and students have seen this movie before. And they know how it ends.

Sources
U.S. Department of Education, Federal Student Aid Handbook
Senate HELP Committee, For-Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success
Federal Trade Commission, University of Phoenix Settlement Documents
U.S. Department of Education, Program Review and Compliance Requirements
Higher Education Inquirer archives

Same Predators, New Logo: 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, PXED trustee, and friend of Barak Obama), 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.

[Image: Power Player Marty Nesbitt]

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.

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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

The College Meltdown Index: Profiting from the Wreckage of American Higher Education

“Education, once defended as a public good, now functions as a vehicle for private gain.”

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From Collapse to Contagion

The College Meltdown never truly ended—it evolved.

After a decade of spectacular for-profit implosions, the higher education sector has reconstituted itself around new instruments of profit: debt servicing, edtech speculation, and corporate “partnerships” that disguise privatization as innovation.

The College Meltdown Index—tracking a mix of education providers, servicers, and learning platforms—reveals a sector in quiet decay.

Legacy for-profits like National American University (NAUH) and Aspen Group (ASPU) trade at penny-stock levels, while Lincoln Educational (LINC) and Perdoceo (PRDO) stumble through cost-cutting cycles.

Even the supposed disruptors—Chegg (CHGG), Udemy (UDMY), and Coursera (COUR)—are faltering as user growth plateaus and AI reshapes their value proposition.

Meanwhile, SoFi (SOFI), Sallie Mae (SLM), and Maximus (MMS) thrive—not through learning, but through the management of debt.

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The Meltdown Graveyard

Below lies a sampling of the education sector’s ghost tickers—the silent casualties of a system that turned public trust into private loss.

Symbol	Institution	Status	Approx. Closure/Delisting
CLAS.U	Class Technologies	Defunct	2024
INST	Instructure (pre-acquisition)	Acquired by Thoma Bravo	2020
TWOUQ	2U, Inc.	Bankrupt	2025
CPLA	Capella University	Merged with Strayer (Strategic Ed.)	2018
ESI-OLD	ITT Technical Institute	Defunct	2016
EDMC	Education Management Corporation	Defunct	2018
COCO-OLD	Corinthian Colleges	Defunct	2015
APOL	Apollo Education Group (U. of Phoenix)	Taken Private	2017

Each ticker represents not only a failed business model—but a generation of indebted students.

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The Phoenix That Shouldn’t Have Risen

No institution better symbolizes this moral decay than the University of Phoenix and Phoenix Education Partners (PXED).

At its height, Phoenix enrolled nearly half a million students. By 2017, following federal investigations and mass defaults, Apollo Education Group—its parent company—collapsed under scrutiny.

But rather than disappearing, Phoenix was quietly resurrected through a private equity buyout led by Apollo Global Management, Vistria Group, and Najafi Companies.

Freed from public oversight, the university continued to enroll vulnerable adult learners, harvesting federal aid while shedding accountability.

In 2023, the University of Idaho’s proposed acquisition of Phoenix provoked national outrage, forcing state officials to confront a basic question: Should a public university absorb a for-profit brand built on exploitation?

The deal collapsed—but the temptation to monetize Phoenix’s infrastructure remains. In 2025, a small portion became publicly traded.  Its call centers and online systems remain models of enrollment efficiency, designed to extract just enough engagement to secure tuition payments.

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From Education to Extraction

The sector’s transformation reveals a deeper moral hazard.

If students succeed, investors profit.
If students fail, federal subsidies and servicer contracts ensure the money keeps flowing.

Executives face no downside. Shareholders are protected. The losses fall on students and taxpayers.

In this sense, the “meltdown” is not a market failure—it’s a market design.

“The winners are those who most efficiently extract value from hope.”

Public universities increasingly partner with private Online Program Managers (OPMs), leasing their brands to companies that control marketing, pricing, and student data. The once-clear line between public and for-profit education has blurred beyond recognition.

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The Quiet Winners of Collapse

A few companies continue to prosper by aligning with “practical” or “mission-safe” sectors:

• Adtalem (ATGE) in nursing and health education,

• Grand Canyon Education (LOPE) in faith-branded online degrees,

• Bright Horizons (BFAM) in corporate childcare and workforce training.

Yet all remain heavily dependent on public dollars and tax incentives. The state subsidizes their existence; the market collects the rewards.

Meanwhile, 2U’s bankruptcy leaves elite universities scrambling to explain how a publicly traded OPM, once championed as the future of online learning, could disintegrate overnight—taking with it a network of high-priced “nonprofit” certificate programs.

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A Reckoning Deferred

The College Meltdown Index exposes a system that has internalized its own failures.
Fraud has been replaced by financial engineering, transparency by outsourcing, and accountability by spin.

The real collapse is not in the market—but in moral logic. Education, once the cornerstone of social mobility, has become a speculative instrument traded between hedge funds and holding companies.

Until policymakers—and universities themselves—confront the ethics of profit in higher education, the meltdown will persist, slowly consuming what remains of the public good.

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“The real question is not whether the system will collapse, but who will rebuild it—and for whom.”

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Sources:

• Higher Education Inquirer, College Meltdown 2.0 Index (Nov. 2025)

• SEC Filings (2010–2025)

• U.S. Department of Education, Heightened Cash Monitoring Reports

• An American Sickness – Elisabeth Rosenthal

• The Goosestep – Upton Sinclair

• Medical Apartheid – Harriet A. Washington

• Body and Soul – Alondra Nelson

• The Immortal Life of Henrietta Lacks – Rebecca Skloot

Divestment from Predatory Education Stocks: A Moral Imperative

Calls for divestment from exploitative industries have long been part of movements for social and economic justice—whether opposing apartheid, fossil fuels, or private prisons. Today, another sector demands moral scrutiny: the network of for-profit education corporations and student loan servicers that have turned higher learning into a site of mass indebtedness and despair. From predatory colleges to the companies that profit from collecting on student debt, the system functions as a pipeline of extraction. For those who believe education should serve the public good, the issue is not merely financial—it is moral.

The Human Cost of Predatory Education

For decades, for-profit college chains such as Corinthian Colleges, ITT Tech, the University of Phoenix, DeVry, and Capella targeted low-income students, veterans, single parents, and people of color with high-pressure marketing and promises of career advancement. These institutions, funded primarily through federal student aid, often charged premium tuition for substandard programs that left graduates worse off than when they began.

When Corinthian and ITT Tech collapsed, they left hundreds of thousands of students with worthless credits and mountains of debt. But the collapse did not end the exploitation—it simply shifted it. The business model has re-emerged in online form through education technology and “online program management” (OPM) firms such as 2U, Coursera, and Academic Partnerships. These firms, in partnership with elite universities like Harvard, Yale, and USC, replicate the same dynamics of inflated costs, opaque contracts, and limited accountability.

The Servicing of Debt as a Business Model

Beyond the schools themselves, student loan servicers and collectors—Maximus, Sallie Mae, and Navient among them—have built immense profits from managing and pursuing student debt. Sallie Mae, once a government-sponsored enterprise, was privatized in the 2000s and evolved into a powerful lender and loan securitizer. Navient, its spinoff, became notorious for deceptive practices and aggressive collections that trapped borrowers in cycles of delinquency.

Maximus, a major federal contractor, now services defaulted student loans on behalf of the U.S. Department of Education. These companies profit directly from the misery of borrowers—many of whom are victims of predatory schools or structural inequality. Their incentive is not to liberate students from debt, but to sustain and expand it.

The Role of Institutional Investors

The complicity of institutional investors cannot be ignored. Pension funds, endowments, and major asset managers have consistently financed both for-profit colleges and loan servicers, even after repeated scandals and lawsuits. Public sector pension funds—ironically funded by educators—have held stock in Navient, Maximus, and large for-profit college operators. Endowments that pride themselves on ethical or ESG investing have too often overlooked education profiteering.

Investment firms like BlackRock, Vanguard, and State Street collectively hold billions of dollars in these companies, stabilizing an industry that thrives on the financial vulnerability of students. To profit from predatory education is to participate, however indirectly, in the commodification of aspiration.

Divestment as a Moral and Educational Act

Divesting from predatory education companies and loan servicers is not just an act of conscience—it is an educational statement in itself. It affirms that learning should be a vehicle for liberation, not a mechanism of debt servitude. When universities, pension boards, and faith-based investors divest from corporations like Maximus, Navient, and 2U, they are reclaiming education’s moral purpose.

The divestment movement offers a broader civic lesson: that profit and progress are not synonymous, and that investment must align with justice. Faith communities, student debt activists, and labor unions have made similar stands before—against apartheid, tobacco, and fossil fuels. The same principle applies here. An enterprise that depends on deception, coercion, and financial harm has no place in a socially responsible portfolio.

A Call to Action

Transparency is essential. Pension boards, university endowments, and foundations must disclose their holdings in for-profit education and student loan servicing companies. Independent investigations should assess the human consequences of these investments, particularly their disproportionate impact on women, veterans, and people of color.

The next step is moral divestment. Educational institutions, public pension systems, and religious organizations should commit to withdrawing investments from predatory education stocks and debt servicers. Funds should be redirected to debt relief, community college programs, and initiatives that restore trust in education as a public good.

The corporate education complex—spanning recruitment, instruction, lending, and collection—has monetized both hope and hardship. The time has come to sever public and institutional complicity in this cycle. Education should empower, not impoverish. Divestment is not merely symbolic—it is a declaration of values, a demand for accountability, and a reaffirmation of education’s original promise: to serve humanity rather than exploit it.

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Sources:

• U.S. Department of Education, Borrower Defense to Repayment Reports

• Senate HELP Committee, For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success (2012)

• Consumer Financial Protection Bureau (CFPB) enforcement actions against Navient and Sallie Mae

• The Century Foundation, Online Program Managers and the Public Interest

• Student Borrower Protection Center, Profiting from Pain: The Financialization of the Student Debt Crisis

• Higher Education Inquirer archives

University of Phoenix’s “TransferPath” App: Convenience or Marketing Hype?

The University of Phoenix has launched TransferPath, a mobile app promising prospective students a quick estimate of how many previous college credits might transfer toward a Phoenix degree. At first glance, it sounds like a win: upload your transcripts, get a pre-evaluation, and move faster toward completing your degree. The EdTech Innovation Hub article covering the launch presents the app as an unambiguously positive innovation—but a closer look raises serious questions.

The EdTech piece reads more like a press release than investigative reporting. It offers no insight into how pre-evaluations are calculated, whether faculty are involved, or how often initial predictions align with final credit acceptance. Without this transparency, students risk developing false confidence and making financial or academic decisions based on incomplete or misleading information.

The app also reflects the asymmetry of power between institution and student. While marketed as a convenience, it is ultimately a recruitment tool. The University of Phoenix controls which credits are accepted, and the app’s messaging may funnel students into its programs regardless of whether other paths would better serve their educational goals.

Missing from the coverage is context. Phoenix’s history as a for-profit institution has drawn scrutiny over retention rates, student debt, and degree outcomes. Presenting TransferPath without acknowledging this background creates a misleading narrative that the app is purely a student-centered innovation. Equity concerns are similarly absent. Students without smartphones, stable internet, or digital literacy may be excluded or misled. There is no evidence that the app serves all students fairly or that its credit predictions are accurate across diverse educational backgrounds.

TransferPath may indeed offer some convenience, but convenience alone does not equal value. Prospective students deserve clarity, honesty, and rigorous evaluation of how tools like this actually function. They need more than marketing optimism—they need realistic guidance to navigate the complexities of credit transfer, institutional incentives, and long-term outcomes.

Until such transparency and accountability are provided, TransferPath risks being more of a recruitment gimmick than a meaningful step forward in higher education.

When Educators Back the Cheating Platform: The Strange Case of Chegg (Glen McGhee)

Chegg — once a poster child for pandemic-era edtech growth — is now in free fall. In 2025 the company announced it would slash 45 % of its workforce, citing plunging web traffic, collapsing revenue, and the onslaught of AI tools that let students bypass paid homework help altogether.

It’s a dramatic reversal for a company that sold itself as a learning aid. But behind that collapse lies an even more troubling paradox: many teacher pension funds and public retirement systems — in whose names educators put decades of trust — hold millions in Chegg stock. Why would those funds invest in a company whose business model many of their own beneficiaries see as unethical, even corrosive?

We’ve seen this pattern before. In the early 2000s, retirement funds like these were major institutional investors in for-profit higher education companies such as EDMC, ITT Tech, and the University of Phoenix. Those institutions promised strong returns but ultimately collapsed under fraud allegations, predatory practices, and declining enrollments. Many public-sector workers indirectly suffered as the funds lost money. Chegg’s story looks eerily similar: high growth promises, an ethically contested business model, and exposure of public retirement funds to extreme financial risk. The repetition suggests a structural pattern: when education is financialized and commodified, the people meant to serve it — educators and students — are exposed to both moral and economic hazards.

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The Downward Spiral: Why Chegg Is Crashing

Chegg’s decline didn’t begin yesterday. It was seeded by technological disruption and a fragile business model dependent on volume, content access, and student compliance. Generative AI tools such as ChatGPT and Bard have undercut Chegg’s core service: paid homework help and explanations. Students can often get free answers faster and more flexibly. Google’s “AI overviews,” which display answer snippets directly in search results, divert traffic away from Chegg’s site, reducing ad and subscription conversions. Chegg has even sued Google, alleging unfair competition.

Earlier in 2025, Chegg laid off 22 % of its staff and closed its U.S. and Canada offices to cut costs. That was supposed to be a stabilization move, but it foreshadowed deeper troubles. The more recent 45 % layoff is sweeping: 388 jobs are being cut, $15–19 million in severance charges are expected, and $100–110 million in cost savings are projected for 2026. Chegg’s stock has lost approximately 99 % of its value since its 2021 peak. Yet the company is still pursuing a pivot toward B2B “skilling” markets, though skeptics doubt whether this can make up for the erosion of its original model. In short, Chegg is facing structural obsolescence. The ecosystem that once made its growth plausible is collapsing around it.

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Pension Funds and the Strange Attraction to Chegg

Several public pension and teachers’ retirement systems hold millions in Chegg: Kentucky Teachers’ Retirement System owns $4.5 million, California State Teachers’ Retirement System owns $4 million, New York State Common Retirement Fund owns $13 million, Colorado Public Employees’ Retirement Fund owns $9.3 million, California Public Employees’ Retirement Fund owns $5.3 million, a Florida retirement fund owns $3.3 million, Ohio Public Employees Retirement owns $1.5 million, and the Teacher Retirement System of Texas owns $630,000.

These investments raise hard questions. Do pension fund managers assume Chegg will survive its technological disruption? Are they prioritizing short-term returns over long-term reputational or ethical risk? Do they believe the stock is undervalued and thus a “contrarian bet”? Are they following passive index allocations rather than making deliberate choices? Some fund managers defend such investments as fulfilling fiduciary duty: to maximize returns for their beneficiaries within acceptable risk parameters. Ethical considerations, they argue, should not trump financial sustainability — especially in a system underfunded and under stress. But when the bet fails, the consequences fall hardest on retirees, educators, and the public who trusted those funds to safeguard their futures.

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Do We Owe Them Sympathy?

It’s tempting to feel a bit sorry: pension funds losing money is a headline nobody wants. But sympathy is complicated. These funds store and grow the life savings of public-sector workers — teachers, librarians, and staff. A poorly timed speculative investment can damage retiree security and erode public trust. On the other hand, this is no innocent failure; it is a foreseeable risk in backing a business facing existential challenges. It reflects a broader pattern of financialization in education: turning learning into a profit-seeking venture, exposing it to wild swings, and treating educators and students as market participants. Losses are regrettable, especially at the human level, but they also demand accountability. Institutions must explain why they placed trust in Chegg when its vulnerabilities were visible.

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What This Reveals: Institutional Contradiction

This episode exposes several deeper contradictions at the intersection of education, finance, and values. Many educators see Chegg as a threat to academic integrity, yet the institutions managing their retirement funds believed in its upside. Some investors are attracted to the “turnaround bet,” seeing potential in a company trading at a fraction of its former value, though the risk is very high. Some funds may hold Chegg because their portfolios track broad indices, ceding moral discretion to the market. Education has become infrastructure built on venture logic, and the Chegg collapse is a warning: when learning becomes a commodity, its institutions become as unstable as any tech startup. Finally, if pension funds backed a cheating-enabled platform, what else might their capital support, and how does that affect trust in those institutions?

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A Moral and Institutional Reckoning 

Chegg’s collapse is not just a market drama; it’s a moral and institutional reckoning. A company built on a questionable model is now evaporating under AI pressure. Meanwhile, public pension funds — meant to safeguard the futures of educators — placed bets on that very evaporation.

We might feel a pang of sympathy for the financial losses. But our greater duty is to probe the judgment of those entrusted with public capital, and to demand coherence between values and investment. If the administrators of teacher retirement funds cannot align ethics with asset allocation, then their claims to serving the public good are weakened — and so is the trust on which the idea of public education depends.

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Sources

Barron’s: “Chegg Is Suing Google. The Stock Is Sinking.”
Reuters: “Chegg to lay off 22% of workforce as AI tools shake up edtech industry.”
SF Chronicle: “Bay Area educational tech company slashes 248 jobs as students turn to AI tools for learning.”
The Cheatsheet Substack: “Meet Chegg’s Biggest Backers.”
The Chronicle of Higher Education: “Work in Public Education and Hate Chegg? You Might Be an Investor.”
Wikipedia: “Chegg”