August 3, 2020

Do Arizona Taxpayers Want to Buy This For-Profit College?

For-profit company Zovio has just announced it is selling Ashford University to public University of Arizona for $1, but Zovio gets a lucrative 15-year contract to “service” the school.

The arrangement looks eerily similar to the dubious deal where Indiana state university Purdue bought for-profit Kaplan, which had a record of abusing students, to create Purdue Global. The agreement raised a serious question for many: Do Indiana taxpayers want to buy this for-profit college?

The online school carries the Purdue name, but in terms of incentives for the operators to provide quality education, versus maximizing revenues, it still seems more like shady for-profit Kaplan. Many on the Purdue faculty are concerned that the school has lost its way. Also, Purdue Global seems to be losing money.

“Higher education is changing,” University of Arizona President Robert Robbins is quoted as saying about the Ashford purchase in today’s Wall Street Journal. But is this kind of change, which Robbins is propelling, good for students and taxpayers? 

Seriously, do the people of Arizona want to buy this for-profit college, Ashford University?

The school, for starters, does not appear to be named for any particular Mr. or Ms. “Ashford.” The name just sounded fancy. Is that the kind of fake good the people of Arizona want to buy? 

More troubling, Ashford University has a long record of deceiving, overcharging, and abusing students, while taking in billions in student grants and loans paid for by U.S. taxpayers.

After conducting a hearing on the school in 2011, then-Senator Tom Harkin (D-IA) declared Ashford “a scam, an absolute scam.” The school has since been sued and investigated by multiple federal and state law enforcement agencies for deceptive and fraudulent behavior that has left many former students with crushing loan burdens.

Zovio, previously called Bridgepoint, recently spun off Ashford as a separate non-profit entity — a questionable transaction facilitated by Trump education secretary Betsy DeVos’s total abandonment of accountability for for-profit schools. One of DeVos’s top higher education aides, Robert Eitel, was previously a senior executive at Bridgepoint.

In March 2011, then-Senate HELP committee chairman Harkin held a hearing focusing on Ashford and Bridgepoint. Harkin presented a series of charts showing that the company had seen rapid growth, with revenues increasing from $33 million in 2008 to $216 million in 2010, while experiencing mounting student loan default rates. Harkin said Bridgepoint was “a scam, an absolute scam … premised on aggressively recruiting largely low-income, disadvantaged students … collecting their federal grants and loans even as the vast majority of students drop out … and lavishly rewarding executives and shareholders with mostly taxpayer dollars.”  He concluded, “From a strictly business perspective, this is a highly successful model. But, I must say, from an educational perspective — and, frankly, from an ethical perspective — it is deeply disturbing model.”

Senator Harkin’s 2012 report on the for-profit college industry found that Bridgepoint taught its recruiters “a sales technique known as ‘overcoming objections.’ If a student presented an ‘objection’ to enrolling, recruiters were instructed to think of this as a ‘buying signal’ that tells the recruiter ‘the student is still paying attention and the “sale” is still alive!’ If a student objected that the cost of attending is too high, the recruiter was taught to respond with questions such as, ‘Investing in yourself . . . You’re worth it right?,’ and ‘how much more will you make once you have your degree?,’ and by discussing how ‘financing options [are] available for those who qualify.’ If a student raised the ‘credibility/reputation’ of Ashford, recruiters were taught to recite promotional statements about how the college was ‘established in 1918,’ discuss the ‘traditional 4-year campus with sports teams, dormitories,’ and how the college has been ‘regionally accredited since 1950.’ In fact, Ashford University … is an entirely different institution than the small religious college that Bridgepoint purchased in 2005. Ninety-nine percent of students do not attend the small Iowa 4-year campus.”

The Harkin report contains accounts by students who contend they were misled by Bridgepoint recruiters, including a veteran who was told his GI bill benefits would cover the entire cost of his degree, only to find out after he was enrolled that he would owe approximately $11,000 out-of-pocket; and a student told that his program would allow him to become a licensed dental assistant only to find that claim was false.

The Harkin report also found that Bridgepoint spent 29.7 percent of its revenue — $211.6 million — on marketing and recruiting, a higher proportion of its than any other publicly traded education company, and more than twice what the company spent on teaching students.

Bridgepoint Education has since been under investigation for fraud and other abuses by five state attorneys general.

In May 2014, Bridgepoint agreed to pay $7.25 million to settle claims by Iowa Attorney General Tom Miller that the company violated Iowa’s Consumer Fraud Act. Miller said at time, “Our investigation found what we allege was troubling conduct by Ashford recruiters, including misleading prospective students to encourage them to sign on the dotted line. Unfortunately for many Ashford students, they didn’t get the degree they hoped for or the job they were led to believe they’d get after graduating. What they did end up with was a crushing amount of student loan debt.”

Miller alleged “unconscionable sales practices through which Ashford telemarketers, under significant pressure to enroll students,” violated the law.  These included: making false or misleading statements to prospective students in order to convince them to enroll; utilizing unfair and high-pressure sales tactics, including emotionally-charged appeals to persuade prospective students to make uninformed decisions to enroll; misrepresenting to prospective students who wished to become teachers that an online Ashford education degree would allow them to become classroom teachers when, in fact, many Ashford graduates are subject to additional requirements that may require additional time, coursework, or money. Bridgepoint denied the charges.

In 2017, California’s attorney general sued Bridgepoint, alleging unfair and fraudulent business practices at Ashford. The lawsuit claims Ashford’s recruiters were fueled by a “boiler room” culture that demanded they meet enrollment quotas. The recruiters, in turn, allegedly told prospective students, falsely, that federal financial aid would cover all of their costs. Ashford denies the charges; the case is still pending.

In 2016 Bridgepoint disclosed that the U.S. Justice Department had served the company with a civil investigation demand aimed at determining whether it misrepresented its revenue from private student loans and thus its compliance with the federal 90/10 rule, which requires for-profit colleges to get at least 10 percent of their revenue from sources other than the U.S. Department of Education.

Bridgepoint also has been under investigation in recent years by the Securities and Exchange Commission and the Consumer Financial Protection Bureau (CFPB). In 2016, Bridgepoint entered into a consent order with the CFPB in which the Bureau found that Bridgepoint “engaged in deceptive acts and practices” and ordered Bridgepoint to discharge all outstanding private loans the institution made to its students and to refund loan payments already made by borrowers. Loan forgiveness and refunds were to total over $23.5 million in automatic consumer relief. Bridgepoint also agreed to pay an $8 million civil penalty to the Bureau.

But while some other giant for-profit college corporations — Corinthian, ITT Tech, EDMC — have collapsed, Bridgepoint, now rebranded Zovio, has carried on, with Ashford receiving $367 million in taxpayer-funded Department of Education aid, and $452 million in total revenue, during 2016-17 (and Bridgepoint’s other school, University of the Rockies, getting another $15 million in federal aid).

Ashford, headquartered in southern California, also has pursued a sham effort to claim it is headquartered in Arizona, a state that has long tolerated for-profit college abuses, in order to keep getting VA money to enroll U.S. veterans.

Andrew S. Clark founded Bridgepoint Education in 2003 and was the company’s CEO through all of the bad behavior described above. He remains CEO of Zovio today.  The company paid him $4.72 million in 2018. That wasn’t his best year; in 2009, his total compensation was $20,532,304.

The Zovio-Arizona deal still needs approval from Ashford’s accreditor, the Western Association of Schools and Colleges.

When Bridgepoint bought a Clinton, Iowa, 87-year-old religious college, The Franciscan University, along with its accreditation, in 2005, and turned it into for-profit, largely online Ashford University, the town expressed concern about the future of the campus and the jobs it provided. Ashford’s new president promised the Clinton city council, “We will never, ever get rid of the Clinton campus.” In summer 2015, capping a decade of troubling behavior, Ashford announced it was getting rid of the Clinton campus.

Arizonans should be asking tough questions about Ashford University now.