Feds Cancel Loans for 2,300 Students Scammed by Ashford U. So Why Does the School Still Get Tax Dollars?
The U.S. Department of Education announced today that it is cancelling $72 million in student loan obligations for more than 2,300 former students who attended for-profit Ashford University between 2009 and 2020.
These ex-students had filed claims under federal rules, called borrower defense, offering debt relief for students who can show that their school ripped them off.
In the case of Ashford, the evidence of predatory abuses was overwhelming. Way back at a 2011 Senate hearing, then-Senator Tom Harkin (D-IA) heard testimony about how in 2005 a San Diego-based for-profit company took over a small Iowa non-profit college and its accreditation and grew it into an almost entirely online school that systematically deceived prospective students. Harkin then declared Ashford “an absolute scam.”
Ashford, whose peak enrollment was a staggering 77,000 students, and peak income from taxpayer dollars exceeded half a billion dollars a year, faced multiple investigations by federal agencies and state attorneys general.
In 2021, in a lawsuit brought by California’s attorney general against Ashford and its parent company Zovio (formerly called Bridgepoint), the state presented at trial devastating evidence of abuses at the school. A California Superior Court judge then ruled that Zovio and Ashford “violated the law by giving students false or misleading information about career outcomes, cost and financial aid, pace of degree programs, and transfer credits, in order to entice them to enroll at Ashford.” The court ordered Zovio to pay $22.4 million in civil penalties. (The company appealed the judgment.)
In a statement today, U.S. Under Secretary of Education James Kvaal said, “Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students. Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing.”
It’s a strong, positive achievement that the Department has provided debt relief to these 2,300 former students who made claims — another in a series of recent actions by the Department to cancel debt incurred by ripped-off students. But the school’s bad behavior was so pervasive, and educational outcomes were so poor, that the Department should move toward much broader debt relief, covering ex-students who haven’t applied for the relief, who, for example, might wrongly blame themselves, not Ashford, for the bad results, or who simply are unaware of the availability of cancellation.
In a statement today, California attorney general Rob Bonta said, “I encourage other individuals who took out federal student loans to attend Ashford, and were subject to its deceptive or misleading tactics, to apply for relief from the U.S. Department of Education as soon as possible.” The Department noted that borrowers who attended Ashford can apply for relief at StudentAid.gov/borrower-defense.
Asked on a call with reporters today why the Department didn’t use its powers to grant automatic relief to former Ashford students, a senior Department official said “there are procedures to follow for open schools,” meaning schools that are still operating, and that the Department “retains the right to consider” such wider debt relief for Ashford students.
Just as concerning as the failure so far to provide automatic relief is this: The Department of Education is, as we speak, still allowing a new generation of students to enroll with federal student grants and loans at Ashford University.
If you Google now for Ashford University, the first, paid link, as well as the school website, will tell you, with refreshing honesty, “Ashford University is now UAGC.”
UAGC stands for University of Arizona Global Campus.
In 2020, the University of Arizona, pressured by the state board of regents to create a stronger online school operation, somehow decided that its future lay in buying predatory Ashford. It made a deal, reminiscent of an earlier unsavory arrangement between Purdue University and the owners of predatory Kaplan University, that would allow former owner Zovio to keep a lucrative contract to run operations at Ashford, which, renamed UAGC, could now hide under the prestigious and politically-strong apron of a premier state institution — and get the regulatory protections of a non-profit school.
After the damning California verdict hurt its reputation even further, Zovio last year seemed to accept its fate, dropping out of the contract with UA, and dissolving as a company — its executives having already pocketed hundreds of millions of dollars. But although UAGC fudged the facts, it was clear that the school was not starting anew, with a more ethical team; almost all of the Ashford staff who had been at Zovio — the people responsible for the predatory abuses and poor quality, over-priced education — were now UAGC employees.
Worse, two whistleblowers have told me that, long after Ashford was renamed UAGC, management continued to press recruiters to deceive prospective students and press instructors to keep students enrolled even if they are gaining nothing from the overpriced courses.
Nevertheless, the collegial western states accreditor WASC, after expressing serious concerns in the past, now seems to have let Ashford-disguised-as-UAGC off the hook, deciding last month to remove its “Formal Notice of Concern” warning from UAGC, and simply urging it to do vague things like “Continue to refine metrics that affect student retention,” “Continue to reflect on variances in student success measures by demographic,” and “create additional initiatives focused on student completion and post-graduate outcomes.”
In the statement released today, the Department said it might not let Zovio-Ashford executives get away with the mess they made; instead the Department will “review the evidence to examine whether members of Ashford’s management and leadership took actions that violated Federal laws or regulations and threatened the integrity of the federal student financial aid programs. If the evidence shows they did, the Department may pursue appropriate remedies to enforce those rules.”
A senior Department official also said on the press call today that the Department planned to exercise its authority to recoup the debt relief losses from the “current owner” of Ashford, while also seeking “anything we can get” from Zovio. The officials on the phone seemed reluctant to refer to the “current owner” as UAGC or the University of Arizona, but the message was clear enough: The state-affiliated school might be liable for old abuses by Ashford, just as critics warned at the time of the deal. The Biden administration might get the courage to try to recoup the money, despite the political risks. And other state schools considering buying a predatory for-profit college — we’re looking at you, University of Idaho — have to worry they might acquire similar liability.
Another senior Department of Education noted that the Department still has a decision to make as to whether to approve a change of ownership of Ashford from Zovio to UAGC, that the decision is “still underway here at the Department,” and that “as we review that transaction, we are going to be looking to be sure that we are confident that any of the behavior uncovered by California is ameliorated and there are protections in place to ensure it does not repeat itself.”
As noted in an article posted yesterday in the Chronicle of Higher Education, these reviews can now take years.
If the Biden administration wants to prevent thousands more students from getting ripped off by Ashford/UAGC, necessitating another round of broken dreams, wrecked financial futures, loan defaults, and taxpayer bailouts, it needs to look very hard at the current UAGC, with its shiny state facade but awful Ashford guts.
As we have said before, the Department of Education, despite the political problems with taking on a major state university, has an obligation to investigate past and current abuses at UAGC and, if the evidence is there, remove UAGC from the federal aid program altogether. In fact, as I previously noted, and colleagues later joined me in urging, the Department is required by federal law to terminate federal aid for a school that has been judged by a court to have engaged in fraudulent activity with federal student aid dollars. That rule, after the California verdict, applies to Ashford.
The some 20,000 remaining UAGC students, most of whom likely don’t even know they are essentially enrolled at notoriously bad Ashford University, deserve a better educational future.
The University of Arizona sent a statement last night to the Arizona Daily Star saying it had “no prior knowledge” of the Department’s announcement and “had absolutely no involvement in, and is not directly or indirectly responsible for, the actions of Ashford and its parent company, Zovio Inc, on which the Department has based its discharge of these borrower defense to repayment claims.” The University claimed, “These actions of Ashford and Zovio occurred well before The University of Arizona Global Campus (UAGC) acquired Ashford University.” The school said it was “reviewing the Department’s action and related information and will be assessing its options.”