U. of Arizona Pulls Predatory Ashford U. Closer
At a trial in a San Diego courtroom late last year, lawyers from the California attorney general’s office presented powerful evidence regarding years of predatory abuses against students by for-profit Ashford University. The case now awaits a verdict by the presiding state judge. Meanwhile, the school has come under increasing scrutiny by its accreditor, WASC, which is demanding evidence of improvements in academic quality. The U.S. Department of Education last November told the school that because it had changed ownership, it would have to provide a $103 million letter of credit, or immediately furnish a financial audit, to remain eligible for federal student aid. And in December, the Department placed the school on Heightened Cash Monitoring 1 status, tightening financial scrutiny.
These factors preceded an announcement last week by the University of Arizona, the flagship public university that acquired Ashford in 2020 and renamed it University of Arizona Global Campus (UAGC), that it would move to assert greater authority over the school. That move could potentially take some influence away from Ashford’s former owner, Zovio, a corporation that continues to run most aspects of the operation under a contract with Arizona.
But are the announced changes real, or just cosmetic? And if Arizona really does make Ashford more its own, what exactly did it purchase?
What is Ashford University?
Ashford University is an online school that in 2005 bought the campus and, as a result, the accreditation, of a 300-student Iowa non-profit college, Franciscan University of the Prairies. In just five years, Ashford grew into a giant institution, with some 80,000 students studying in fields including business, criminal justice, education, health care, information technology, and liberal arts.
Over time, Ashford has received hundreds of millions of dollars from taxpayers for federal student grants and loans.
Ashford is also the school whose deceptive and predatory practices were the subject of a 2011 hearing by the Senate Health Education Labor and Pensions Committee, at which the committee chair, Senator Tom Harkin (D-IA), called the institution “an absolute scam.”
Ashford University has little or no real-time group instruction. It’s an Internet-age correspondence course appended to a giant call center set up to recruit new students. And its results have been abysmal. Only about 22 percent of Ashford’s students graduate from the school. Many former students have been left buried under heavy student loan debt and without the career advancement they sought.
The scam is broad. There is no founder named Horatio Ashford; Ashford was a made-up name, presumably selected to falsely suggest a stately legacy. Ashford’s parent company Zovio, then called Bridgepoint, when it took over Franciscan in 2005, promised the Clinton, Iowa, city council, “We will never, ever get rid of the Clinton campus.” In summer 2015, Ashford got rid of the Clinton campus.
In 2014, Bridgepoint agreed to pay $7.25 million to settle claims by Iowa’s Attorney General that Ashford violated the state’s Consumer Fraud Act. In 2016, Bridgepoint entered into a consent order with the federal Consumer Financial Protection Bureau in which that agency found that Ashford “engaged in deceptive acts and practices” and ordered the company to discharge all outstanding private loans the institution made to its students and to refund loan payments totaling $23.5 million and pay an $8 million civil penalty.
Arizona Buys Ashford
In 2020, the leaders of the University of Arizona, apparently pressured by state regents to build an online education operation (like the successful one at rival Arizona State), somehow decided it made sense to reach an agreement with Zovio to acquire Ashford and lock itself into a deal under which Zovio runs the school’s operations for seven to fifteen years and gets 15 to 20 percent of its revenues.
Ashford University is now called University of Arizona Global Campus, but according to two employees who recently worked there and spoke with me, in terms of pressure on recruiters to deceive prospective students, and pressure on instructors to keep students enrolled even if they are gaining nothing from the overpriced courses, it’s still just Ashford University.
An online ad for UAGC showing a tableau of beaming student faces was, I found from a web search, in fact a purchased package of stock photos called “Smiling group of ethnically diverse professional businessman and businesswoman.” The ad was found via a shady lead generation website, and the page touting UAGC still had “Ashford” in its URL.
The whole operation, it seems, remains fundamentally deceptive.
Zovio’s founding CEO, Andrew Clark, who was paid as much as $20.5 million in a single year (2009) to run a school largely populated by lower-income students, suddenly resigned last March. The new CEO, who wasn’t announced until December, is Randy Hendricks, an education technology executive.
UAGC now has around 25,000 students, and it has been struggling to maintain enrollment levels.
California takes Ashford to trial
The state of Arizona purchased Ashford University despite all the evidence of abuses, and even though the neighboring state of California in 2017 sued Ashford University, alleging the school engaged in unfair and fraudulent business practices, with school recruiters fueled by a “boiler room” culture that demanded they meet enrollment quotas and pushed them to engage in deceptions.
That case was tried in November and December, and the judge, who heard the case without a jury, predicted at its conclusion that he would issue a decision promptly.
The California attorney general is seeking $100 million in penalties and restitution for students, as well as an injunction aimed at curbing predatory behavior at the school going forward.
If you read the transcripts of the 19-day trial, and the post-trial briefs filed late last week by the attorney general and by Zovio, there is ample evidence to convince the judge to rule against Ashford and grant the relief sought.
The evidence showed that many people who enrolled at Ashford believed it was a pathway to becoming a K-12 teacher. But teaching in public schools requires a license, and many private schools also require or prefer a license. Ashford admitted that its online programs have never been state-approved for teaching licenses.
An Ashford recruiter falsely told Alison Tomko that Ashford was part of an interstate agreement that would allow her to be licensed as a school librarian in Pennsylvania. Only after she graduated did Tomko discover she needed extensive additional credits to even begin the student teaching required to become a school librarian. She now works as a phlebotomist, drawing people’s blood, a job that doesn’t require a bachelor’s degree.
Pamela Roberts testified at trial that she wanted to become a substance abuse counselor because she had benefited from such services when she struggled with abuse issues as a teenager. A week before graduation, after four years of study, and having incurred $60,000 in student debt, Roberts found out her Ashford degree did not meet the requirements to become a certified substance abuse counselor.
An Ashford recruiter told single mother Roberta Perez that a master’s degree in psychology from Ashford would make her eligible for jobs in therapy, counseling, and social work. After graduating with $40,000 in loans, she received a letter from a state licensing agency that her Ashford degree was not approved for licensure as a therapist and that she would have to obtain a new degree to proceed.
Loren Evans testified she directly asked her Ashford admissions representative whether she would have any out-of-pocket expenses while she was enrolled, making clear she was supporting her children and could not afford such costs. The Ashford recruiter assured Evans there would be no such expenses. The assurance was false, the bills piled up, and Evans was forced to withdraw.
Some Ashford recruiters falsely understated the costs of attending the school, and misled students by stating the cost per academic year without explaining that it took five academic years to graduate Ashford, not four.
Recruiters also deceived students about their ability to transfer academic credits to and from Ashford. One Ashford recruiter, Molly McKinley, testified that she was trained to tell students concerned about transferability of credits that it would not be a problem, but then “sort of sneak it in and say quieter to them, ‘but you’ve got to check with the registrar.'”
Internal Ashford emails reflected that the Ashford admissions department was a high-pressure environment where recruiters feared every day they would be terminated if their enrollment numbers were low. Recruiters were expected to make hundreds of calls to prospects every day. One employee said, “The only objective is to enroll as many students as possible. Employees fear for their jobs every day if they are not enrolling enough students.” Recruiters who “did not sell” were publicly “mocked.” One reported, “The stress is beyond measure,” and another said, “There are no values here.”
Zovio argued in response that it is not illegal to fire low performers.
Zovio lawyers also claimed at trial that any deceptive recruiting represented “isolated incidents” of unauthorized, covert freelancing by low level employees; that management trained employees to tell the truth and never told any employees to lie; and that written disclosures to students were accurate. But evidence produced at trial included a 2010 internal ombudsman report, seen by senior company officials, reporting that some recruiters were giving students false information about academics, financial aid, licensing eligibility, credit transferability, and more. A Zovio official testified she could not recall any steps the company took to address the ombudsman’s concerns.
An AG office lawyer asked Ashford admissions rep Eric Dean which of his supervisors were aware that he made false statements regarding the costs of an Ashford degree. Dean replied, “All of them.”
Zovio records showed that CEO Andrew Clark directed staff in 2020 to “overcome… objections” of students wanting to withdraw due to COVID.
Ashford hired a firm, Norton Norris, to mystery shop the school, posing as prospective students and recording interactions. The firm found numerous examples of recruiters making false statements about key matters. Yet admissions representatives who were found to have deceived students received promotions. And Ashford ultimately terminated Norton Norris, claiming the services were not useful. (Vince Norton, whose company has long served the for-profit college industry — his co-principal at Norton Norris, Jean Norris, sits on the board of the industry’s trade association, CECU — testified in support of Ashford.)
The evidence at trial also indicated that Zovio’s deceptive recruiting did not end when Ashford became UAGC. Pat Ogden, a vice president of regulatory affairs at Ashford who remained with the company after the conversion to UAGC, told the court that UAGC is a “the same institution under a different name.” She continued, “Zovio is providing the same enrollment and marketing services” and “Zovio’s historically ineffectual compliance department will continue to exercise oversight over the Zovio admissions counselors enrolling students in UAGC.”
Evidence in the case also showed that Ashford, apparently unlawfully, passed the cost of debt collection efforts on to students, often inflating overall student balances by a third.
A Zovio lawyer, Jack Yeh of the big corporate law firm Sidley Austin, told the judge in his closing summation that although the attorney general presented 26 students with “various complaints,” that was out of “695,000 potential students” and that “the Attorney General never wants to talk about those that are happy with their experience, those success stories.” Zovio’s lawyers kept saying in court that they didn’t want to blame the students for their bad outcomes. But then they kept blaming the students.
Zovio noted that WASC, the accreditor, repeatedly found the school in compliance. But that’s not particularly significant, because numerous academic accreditors for years have let predatory college abuses slide. And, as noted, WASC has now demanded answers from Ashford regarding its practices.
Zovio also cited the relatively clean bill of health given Ashford by Thomas Perrelli, the corporate lawyer charged with monitoring the school’s settlement with Iowa’s attorney general. California countered that Perrelli’s oversight, often delegated to junior lawyers at Perrelli’s firm, was anemic.
In perhaps the most remarkable part of Yeh’s closing argument for Ashford/Zovio, he insisted the attorney general’s arguments were offensive because they assumed that every Ashford student was enrolled simply to improve their economic future, rather than to learn for the sake of learning. Yeh said the testimony of the state’s expert witness, George Washington University economist Stephanie Riegg Cellini, that Ashford degrees did not help students
should be given zero weight because she fails to consider that students are, in fact, human beings. They are not wage earners. They are not just wage earners. She reduces every single student to a statistical earner and values them only for their ability to earn. That is offensive. Absolutely offensive. To justify the conclusion that an Ashford education… has no value, they get her to testify that they’re all failures.
But, Your Honor, even the Attorney General’s own student witnesses told you that they received value, they received tangible benefit, that an Ashford degree was the first step to further educational goals, it was the first step to licensure requirements, that they were earning more now than before they started.
They also told you about the intangible benefit, the pride it brought them, the role model they could be to their children, the confidence it gave them.
And, Your Honor, that’s consistent with the common experience of every single person in this room, whether they’ve gone to college or not. That’s the value of education. You can’t quantify that, and you can’t dismiss a person because they don’t earn more than the cost of what they paid for that education. In fact, those are the true success stories, people who don’t earn more, and they did it for the value of the education.
And while they want to dismiss the value of friendship, mentoring, and networking, just think about the value that plays in our own lives.That’s what I tell my son to focus on in his education, my daughter to focus on in her education, what relationships are you developing, what kind of networks are you developing, what are you learning about life in your education?
That’s the value of education. It’s offensive to reduce it to a wage.
Yeh then charged that the real point of the lawsuit against Ashford was “a fund-raiser for the Attorney General’s Office” through the penalty sought: “They can come into any company, find one or two isolated incidents, and then extrapolate that into a companywide penalty. It is — it is prosecutorial taxation.”
Yeh’s melodramatic oration might reflect the desperation of his client’s situation. If the California judge issued a judgment against Ashford/Zovio, there would be a strong argument that the U.S. Department of Education should cut off all federal aid to UAGC.
What is Arizona saying now?
Last week, at a special session of the Arizona Board of Regents, University of Arizona president Robert Robbins announced that his school would shift course and integrate UAGC into the school, rather than keep it as a separate entity with a separate governing board. But, as the Arizona Daily Star reported, the details of this transition remain unresolved. And even after the absorption, it appears, Zovio’s extensive role in providing recruiting, marketing, instruction, and other services for perhaps another 14 years would not be diminished.
The Daily Star also reported that UA avoided the large letter of credit obligation the education department was requiring by agreeing to sign as a guarantor UAGC’s program participation agreement with the department.
The idea of a rapid absorption of the predatory Ashford/UAGC into UA may or may not appeal to the numerous UA faculty who have objected to the acquisition as a threat to the academic and moral integrity of the state school.
It’s been difficult to understand in recent years why the esteemed and seemingly sensible leaders of some major universities — Arizona, Purdue, the University of Arkansas — have been eager to acquire for-profit schools with awful records of predatory practices and law enforcement attention, and many other mainstream schools have made deals with outside online program manager (OPMs) companies that engage in comparable predatory practices. It must be an intense concern about not being left behind in the emerging online instruction / education technology space, creating a desperation to stand up a big online program as soon as possible.
But though the new online programs are each publicly justified as a new commitment by an elite school to do more to assist lower-income Americans and provide needed practical career education, the actual results are not that at all. Instead the programs provide big revenues to the schools from increased federal aid, including big loans that low-income students must repay, even though many of the students will, whether they drop out or graduate, gain little in terms of valuable career skills or credentials. The millions and billions that low-income students — single moms, veterans, the elderly, and others — provide in tuition, and resulting heavy debt, might instead ultimately (after the corporate OPMs take their profits) subsidize the schools’ main campuses, with their more privileged, wealthier students, sports programs, and the like.
There are far better ways for government and institutions to invest in career education and lower-income students than these for-profit operations.
What is happening at Arizona and elsewhere is a troubling degradation of higher education. Students and taxpayers deserve much better.