More than a quarter-million students who attended former San Diego for-profit college Ashford University, which was found to have violated numerous laws and left most attendees without the degrees it promised, will have a collective $4.5 billion in student loan debts forgiven, the Biden administration announced Wednesday.
The U.S. Department of Education said it will discharge the debt for about 261,000 borrowers who attended the mostly online college.
“Numerous federal and state investigations have documented the deceptive recruiting tactics frequently used by Ashford University,” U.S. Under Secretary of Education James Kvaal said in a statement. “In reality, 90% of Ashford students never graduated, and the few who did were often left with large debts and low incomes. Today’s announcement will finally provide relief to many students who were harmed by Ashford’s illegal actions.”
The California Attorney General’s Office filed a lawsuit in 2017 in San Diego Superior Court against Ashford and its parent company, which was then known as Bridgepoint Education, alleging the school violated unfair competition and false advertising laws by giving prospective students bogus information to lure them into enrolling.
Following an 18-day bench trial in late 2021, San Diego Superior Court Judge Eddie Sturgeon ordered Ashford and its parent company to pay more than $22 million in fines, ruling that the college misled students about job prospects, the cost of college and financial aid, the pace of an online degree program and the ability to transfer credits.
An appeals court upheld almost the entirety of Sturgeon’s ruling last year, ordering the university and its parent company to pay more than $21 million in penalties.
“I am proud that California’s work taking this case to trial paved the way for the U.S. Department of Education to provide relief today for the hundreds of thousands of Americans who were deceived by Ashford,” California Attorney General Rob Bonta said in a statement. “I commend the Biden Administration and the Department of Education for making sure that students who were scammed into trusting in Ashford have the opportunity for a brighter future they always deserved.”
Ashford University, which at its peak had nearly 80,000 mostly online students, no longer exists. It was acquired in late 2020 by the University of Arizona Global Campus, a nonprofit organization affiliated with the University of Arizona to provide online higher education programs.
Bridgepoint Education, which was founded in 2005 and was the title sponsor of the Holiday Bowl from 2010 to 2012, changed its name to Zovio in 2019 and moved its headquarters from San Diego to Chandler, Ariz. It also changed its business model, supplying behind-the-scenes software and apps to power online learning programs instead of offering its own schooling.
Zovio went out of business in late 2022.
In a related but separate action, the Department of Education said Wednesday that it has moved to debar Andrew Clark, the founder, president and former CEO of Zovio. The move would block Clark from acting as a principal or executive of nearly any higher education institution for at least three years. Clark can contest the proposed debarment.
In addition to the San Diego lawsuit at the heart of Wednesday’s announcement, Ashford and Zovio had faced lawsuits from the attorneys general of Iowa and North Carolina, plus lawsuits and investigations by several federal agencies.
Among the findings in the San Diego lawsuit and other suits was that Ashford recruiters told students they would be able to work as teachers, social workers, nurses, or drug and alcohol counselors — but the university never obtained the necessary state approvals and accreditation for students to enter those professions.
“Students wasted years of their lives and incurred tens of thousands of dollars of debt for degrees they could not use,” the Department of Education said in a statement.
Ashford recruiters also lied about the ability to transfer credits, lied about how long it would take students to obtain a degree — bachelor’s degree programs were structured to take five academic years to complete instead of the traditional four years — and lied about the amount and type of financial aid students would receive, according to the Department of Education. This included recruiters falsely telling prospective students they would not incur any out-of-pocket costs, that every Ashford student qualified for Federal Pell Grants or that loan payments would never be more than $75 per month.
The Department of Education said former Ashford students approved for a discharge will not need to take any action to have their debts wiped out. Borrowers will be sent emails from the department in the coming days notifying them that their outstanding balances for their Ashford loans will be discharged.
Including the discharges for Ashford students, the Biden administration said it has now discharged $34 billion in debt for nearly 2 million borrowers whose schools took advantage of them or closed. The administration said it has also provided more than $150 billion in relief to more than 3 million other borrowers, including those with permanent disabilities and through improvements to the Public Service Loan Forgiveness program.
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