With three consecutive years of financial losses, Zovio (formerly known as Bridgepoint Education) lost a record $61 million in 2020. Over the trailing 12 months (ttm) the company has lost $76 million. Cash assets have decreased from $357 million in 2016 to $33 million in 2021.
Zovio's cash runway (a key indicator of financial health) is now less than a year from zero, with revenues amounting to a fraction that they once were. Liabilities are also greater than all assets.
Zovio is working with a new CEO, Randy Hendricks, who has limited management experience, and the company has already been pared down to about 1500 full-time employees.
Insiders tell the Higher Education Inquirer that the deal between Zovio and University of Arizona was a deal between people of low integrity and a lack of imagination.
According to the Department of Education's College Navigator, University of Arizona Global Campus has just 194 full-time instructors for about 35,000 students, and many of those full-time instructors are also tasked with management roles: the tell-tale traits of a subprime robocollege.
To make matters worse, ZVO, which was already financially unstable, was recently ordered to pay $22 million in compensation to California students who were defrauded.
While Zovio's 2021 Annual Earnings will not be presented until
Zovio's Assets (2009-2021) Source: Macrotrends.net
Zovio's Annual Report is coming out weeks late,
Since March 18, ZVO shares have been below the $1 per share threshold to remain on the NASDAQ. Thirty consecutive trading days below $1 will trigger the first stages of a delisting from the stock market.
What we are seeing looks very much like Corinthian Colleges and ITT Education before they collapsed. Each day, ZVO is getting closer to being delisted from NASDAQ and they are quickly running out of cash.
But what happens to federal government funding and oversight if Zovio collapses? And how about UAGC--will it end up costing Arizona taxpayers?
With UAGC, only a handful of edtech companies could handle such a large transition. Experts we have contacted do not agree on potential surrogates for the online university or whether a surrogate is even necessary.
Will the US Department of Education (ED) try to get another company to take over the business? In the Corinthian Colleges collapse, ED was able to get ECMC to take over operations.
Will the US Department of Education require a special monitor, as they did with Corinthian Colleges?
University of Arizona could hire key executives and personnel, but that could cost the State of Arizona to hire those folks as state employees.
These are issues that need to be addressed by the Department of Education and the State of Arizona now, to avoid another student loan train wreck.
These are issues that need to be addressed by the Department of Education and the State of Arizona now, to avoid another student loan train wreck.
[Post script: On Monday, March 28, 2022, Zovio announced that their 2021 Annual Earnings would be delayed. No new date was reported.]
*University of Arizona Global Campus was previously known as Ashford University. According to the US Department of Education's College Scorecard, Ashford University has a 22 percent 8-year graduation rate. The College Scorecard reported that of student debtors two years into repayment, 32 percent were in forbearance, 28 percent were not making progress, 13 percent defaulted, 12 percent were in deferment, 7 percent were delinquent, 5 percent were making progress, 2 percent were paid in full, and 2 percent were discharged.
Related link: Verdict Against Zovio Adds to Peril for Arizona Global Campus (David Halperin, Republic Report)
Related link: Verdict Against Zovio Adds to Peril for Arizona Global Campus (David Halperin, Republic Report)
Excellent overview. The only thing to add here is the meticulous account of all the ways in which Zovio defrauded California students, and the Court's penalty analysis is the most detailed that I have ever seen. This level of detail is something that whistleblowers pray for, but never attain. Unbelievable.
ReplyDeleteCourtesy of Republic Report: https://oag.ca.gov/system/files/attachments/press-docs/37-2018-00046134-CU-MC-CTL_ROA-696_03-03-22_Statement_of_Decision_1646669688827.pdf
In his 49 page opinion, California Judge Eddie C. Sturgeon found for the plaintiffs on March 3, 2022, citing evidence that Zovio deceived students about their ability to become teachers, nurses, social workers, drug and alcohol counselors using their degrees; and misled students about how much financial aid they would receive; misrepresented federal financial aid rules, understated costs of attendance, the time needed to complete degree requirements, their ability to transfer credits, and evidence of deception within the admissions department, and Zovio's tolerance for repeat compliance offenders. $22,375,282
Of course, the unstated concern is that, perverse incentives being what they are, Zovio has not changed (much) now that it is working for University of Arizona.
DeleteGlen, you are right. Zovio (aka Bridgepoint) has not changed. If anything, it will get worse as it tries to stay afloat.
DeleteThey've partnered up with my employer to offer a scholarship and 35% off tuition. https://www.uagc.edu/partnerships/corporate/walgreens
ReplyDeleteIs anyone taking the bait?
ReplyDeleteI don't know anyone that's going there but I applied for the scholarship even though now I know it's not worthwhile going unless someone else is picking up the tab.
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