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Showing posts sorted by relevance for query Department of Defense. Sort by date Show all posts

Thursday, March 16, 2023

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

The Higher Education Inquirer has posted a number of articles about student loan debt. In 2023, the student loan mess has reached epic proportions. Not only has the US Federal Student Aid debt portfolio reached more than $1.6 Trillion, we learned that $674 Billion was estimated to be unrecoverable. 

In California, the US District Court in Sweet v Cardona agreed to a $6 Billion settlement between student debtors and the US Department of Education. 

In Texas, a group representing for-profit colleges has sued the US Department of Education for their actions in settling Borrower Defense claims. 

And across the US, about 40 million student debtors and their families are awaiting a decision from the US Supreme Court—a decision that will not likely favor the debtors.

Borrower Defense, Subprime Colleges, Subprime Programs

Borrower Defense to Repayment claims are claims by student loan debtors that their school misled them or engaged in other misconduct in violation of certain state laws. The Department of Education may discharge all or some of the student loan debt and hold the school and its owners responsible. 

As of January 2023, there are more than three quarters of a million Borrower Defense claims against schools. And each month, about 16,000 new claims are added.  Evidence from the Sweet v Cardona case revealed that only about 35 workers were responsible for processing hundreds of thousands of claims. Those claims have been disproportionately made against a number of for-profit colleges and formerly for-profit colleges, what we call “subprime colleges.”   

Some of these subprime schools have closed (Everest College, ITT Tech, and Westwood College for example), some remain in business as for-profit colleges (like University of Phoenix and Colorado Tech), some have changed names and become covert for-profit colleges or robocolleges (like Purdue University Global, University of Arizona Global Campus, and the Art Institutes), and some schools act act like subprime colleges regardless of tax status. This includes low-return on investment programs at several US robocolleges and overly expensive graduate programs offered by 2U, an online program manager for elite colleges.  

In the Sweet v Cardona case, more than 200,000 student borrowers are expecting to receive full debt relief after years of struggling.  A Facebook group Borrower Defense-Sweet vs. Cardona currently has more than 14,000 members. 


Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v Cardona (Image credit: Ashley Pizzuti)

Transparency and Accountability 

The US Department of Education keeps an accounting of Borrower Defense claims, but only publishes the aggregate numbers, not institutional numbers. Those institutional numbers do make a difference in promoting transparency and accountability for the largest bad actors. So why does the Department of Education not publish those institutional numbers?
 
The National Student Legal Defense Network submitted a FOIA (22-01683F) to the US Department of Education (ED) in January 2022 asking just for that information. And what HEI has discovered is that just a small number of schools garnered the lion's share of the Borrower Defense claims. To get a digital copy of that information, please email us for a free download.

Related links:

Borrower Defense-Sweet vs Cardona (Facebook private group)  

Project on Predatory Student Lending

Sweet v. Cardona Victory (Matter of Life and Debt podcast)

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)


The Growth of "RoboColleges" and "Robostudents"


Wednesday, July 12, 2023

University of Phoenix and the Ash Heap of Higher Ed History

 (Updated September 14, 2023)

The University of Phoenix (or at least its name) may soon enter the ash heap of US higher education history--and rise again as a state-run robocollege.  But it shouldn't--at least not yet. Once hailed as the leader in affordable adult education for workers entering middle management, it is a shell of its former self--in an economy less certain for workers and consumers. 

With the school's wreckage are approximately one million people buried alive in an estimated $14B-$35B in student loan debt.  

Pattern of Fraud

As of January 2023, more than 69,000 of these student loan debtors have filed Borrower Defense to Repayment fraud claims with the US Department of Education against the University of Phoenix (UoPX). Many more could file claims when they become aware of their rights to debt relief. In the partial FOIA response below, the US Department of Education reported that 69,180 Borrower Defense claims had been made against the school.

In a recent federal case, Sweet v Cardona, most if not all of the 19,860 "denied" cases were overturned in favor of the student loan debtors.  We estimate the smaller number of fraud claims alone to amount to hundreds of millions of dollars.  

Through a FOIA request, we also discovered 6,265 consumer complaints in the FTC database. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims.  Based on the consumer complaints, we have no reason to believe that Phoenix has changed its behavior as a bad actor. 

On May 3, 2023, six US Senators (Warren, Brown, Blumenthal, Durbin, Merkley, Hassan) called for the US Department of Education, Department of Veterans Affairs, and Department of Defense to investigate the University of Phoenix for launching a new program suggesting that it was a public university.  The letter stated that the school "has long preyed on veterans, low-income students, and students of color."

Wolves in Sheep's Clothing

University of Phoenix's owners could potentially be liable for refunding the US government for the fraud. But as a state-related organization, it may be more politically difficult to claw back funds, no matter how predatory the school is.  

Purdue University Global and University of Arizona Global set a precedence in state-related organizations acquiring subprime schools (Kaplan University and Ashford University) and rebranding them as something better. Whether they are better for consumers is questionable. Phoenix will have to cut costs, largely by reducing labor. Using Indian labor (like Purdue Global) and AI could be profitable strategies.  It's likely that this deal, even if profitable, will add fuel to the growing skepticism of higher education in the US. 

University of Phoenix's Finances

Apollo Global Management and Vistria Group currently own University of Phoenix but have been trying (unsuccessfully) to unload the subprime college for more than two years. Little is publicly known about the school's finances. What is known is that UoPX gets about $800M every year from the federal government, through federal student loans, Pell Grants, GI Bill funds, and DOD Tuition Assistance.

Despite this government funding, US Department of Education data show the school's equity value for the Arizona segment declined significantly, from $361M in FY 2018 to $187M in FY 2021. 

$347M of the University of Phoenix's $518M in assets are intangible assets. Intangible assets typically include intellectual property and brand reputation. The school has $348M in liabilities.  

The University of Phoenix has been reducing expenses by cutting instructional costs, from $70M in FY 2020 to $60M in FY 2021. UoPX spends about 8 percent of its revenues on instruction.

Marketing and advertising expenses are not available, but Phoenix has been visible on the Discovery Channel's Shark Week, CBS' Big Brother, and other television events. ISpot.tv reports that University of Phoenix spends millions of dollars each year on television ads.  On one ad alone, the ad spend from February 2023 to July 2023 was an estimated $3.5M. 

Attempts to Sell UoPX

There have been two known potential buyers for the University of Phoenix: the University of Arkansas System and the University of Idaho. In both cases, the owners required the potential buyers to keep the deal secret until the sale was imminent.  

Fear of the impending higher education enrollment cliff appears to be an important pitch to potential buyers. 

Arkansas, the first target, was in the process of making the deal, and it might have gone through if nit for the voice of one whistleblower and one outstanding investigative reporter, Debra Hale Shelton of the Arkansas Times.

In the case of Idaho, news of the potential deal was publicly noted just one day before the preliminary agreement was made with the Idaho Board of Education. Two other secret meetings were held before that.  

A number of journalists including Kevin Richert (Idaho EdNews), Laura Guido (The Idaho Press), Troy Oppie (Boise State Public Radio), and Noble Brigham (Idaho Statesman) have exposed some of the problems and potential problems with the deal.  In June, Idaho legislators began questioning the acquisition.  

More recently, the opinion editor at the Idaho Statesman argued that the deal may actually be worthwhile

Particulars about the finances are sketchy at best and misleading at worst.  The University of Phoenix is said to include $200M in cash in the deal, but they have not said how much of that sum is required by law as "restricted cash"--money the school needs if the Department of Education needs to claw back funds.  Phoenix also claims to be highly profitable, but without showing any evidence.  

What is known about the deal is that the University of Idaho will have to borrow $685M and put its (bond) credit rating at risk. The school has not identified important information how the bonds would be sold (underwriters, bond raters, date to maturity, interest rate). 

The University of Idaho has created an FAQ to answer questions about the sale, but HEI has identified a number of misleading statements about University of Phoenix's present finances (failure to report the school's equity), potential liability (cost of tens of thousands of Borrower Defense claims), and leadership (lack of background information about Chris Lynne, the President of the University of Phoenix).  These deficiencies have been reported to the University of Idaho and to the Representative Horman. 

On June 20, Idaho Attorney General Raul Labrador filed a lawsuit to halt, or at least slow down the deal. 

The University of Idaho submitted a Pre-Acquisition Review from the US Department of Education, and it may take up to three months before the application is completed. 

As of September 2023, the deal is far from done.  Since this article was first published there have been a number of developments:

On September 11,  US Senators Elizabeth Warren, Dick Durbin, and Richard Blumenthal called on University of Idaho President Green to abandon the sale.  The Senators also asked Green if he had a plan to pay for the Borrower Defense claims, noting that University of Arizona may be on the hook for thousands of claims against Ashford University (aka University of Arizona Global campus).

In November, the Joint Finance-Appropriations Committee of the Idaho Legislature is expected to discuss the issue again.

*The Higher Education Inquirer has made a FOIA request for more up-to-date numbers from the US Department of Education. We have also filed FOIA requests with the FTC. 


Related link: 

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

The Growth of "RoboColleges" and "Robostudents"

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

Tuesday, January 2, 2024

Predatory Colleges, Converted To Non-Profit, Are Failing (David Halperin, Republic Report)

[Editor's note: This article originally appeared on Republic Report.] 

About a dozen years ago, owners of some of the biggest, worst-acting for-profit colleges began concocting, with their eager, high-paid lawyers, schemes to convert their schools into non-profits. The apparent aims were to evade the heightened government regulations applied uniquely to for-profit schools in order to guard against waste, fraud, and abuse — and to escape the growing stigma that the industry’s predatory behavior had placed on for-profits.

The clever schemes have come in various colors, yet most of them potentially allowed the sharp operators to keep making big money off the schools they no longer formally owned but, one way or another, still controlled. These dubious deals, mostly blessed by servile government departments and accrediting agencies, have made a mockery of non-profit rules, and, much worse, have helped sustain another decade of predatory college abuses against students and taxpayers, resulting in the waste of billions of dollars and the ruining of the financial futures of tens of thousands of people — veterans, single moms, and others — who sought better lives through higher education.

Yet, just as the private equity owners of the University of Phoenix, historically one of the biggest for-profit schools, are now trying to execute yet another dubious version of this scheme — getting a pile of cash by unloading the school on Scott Green, the hubristic president of the University of Idaho, and potentially allowing the current, high-paid executive team to stay employed — it seems, increasingly, that many of these non-profit conversions are not just harmful to the public but also ultimately unsustainable for the operators.

Here’s what’s been happening lately:

— Last week, the Federal Trade Commission sued Grand Canyon University and its CEO, asserting that the school deceived doctoral students about the costs and course requirements of programs — and about the school’s claimed nonprofit status. The FTC also alleges that Grand Canyon engaged in deceptive and abusive telemarketing.

The FTC lawsuit follows an October announcement by the U.S. Department of Education that it is imposing a $37 million fine on Grand Canyon based on similar allegations.

Grand Canyon CEO Brian Mueller has responded to the FTC and education department investigations with a remarkable series of pronouncements suggesting that the moves against his self-proclaimed Christian university are rooted in religious or ideological bias. But, in reality, Grand Canyon’s troubles with regulators began not in the Biden administration, which has cracked down on for-profit college abuses, but under Trump education secretary Betsy DeVos, a Christian conservative who staffed her office with former for-profit college executives and did almost nothing else over four years to hold predatory colleges accountable.

Grand Canyon in 2018 had restructured itself into two entities: a non-profit college, GCU, and a for-profit company, Grand Canyon Education (GCE), that gets paid to provide a range of services to the school. Even though the IRS already had declared GCU a legitimate non-profit, the DeVos Department of Education in 2019 rejected the school’s bid for preferred non-profit status under federal education rules, concluding that “the primary purpose” of the Grand Canyon conversion to non-profit was “to drive shareholder value for GCE with GCU as its captive client — potentially in perpetuity.” The DeVos team couldn’t help but notice that Brian Mueller is the well-paid head not only of the non-profit school but also of the for-profit company has been getting about 95 percent of the non-profit college’s revenue.

Together, the Department and FTC actions call into question not only the integrity of Grand Canyon’s recruiting and academic operations, but also its effort to be accepted as non-profit.

— Last month, the Department of Education took another step to hold accountable the non-profit Center for Excellence in Higher Education, whose schools, the largest of which was Independence University, shut down in 2021. The Department demanded $23 million from CEHE to pay for “closed-school discharges” — reimbursement for cancellation of federal student loan debts that former students had owed the government. The Department in July already had cancelled $130 million in federal loan debt from former CEHE students, citing school misconduct; the Department could potentially seek to recoup all those funds from CEHE.

The ultra-wealthy Ayn Rand disciple Carl Barney owned the schools until 2012, when he sold them at a hefty valuation to CEHE, a small non-profit that he controlled. Seemingly sleepy career officials at the Department of Education approved the transaction in the Obama years, but public scrutiny raised doubts about the appropriateness of the deal.

Like Grand Canyon, CEHE’s abuses were by no means limited to the terms of the non-profit conversion. In 2020, a Colorado court found the company had engaged in systematic deceptive practices. Barney’s schools, the court concluded after an extensive trial, used a detailed playbook to manipulate vulnerable students into enrolling in high-priced, low-quality programs; directed admissions representatives to “enroll every student,” regardless of whether the student would likely graduate; greatly overstated starting salaries that graduates could earn; and falsely inflated graduation rates. CEHE has been pursuing an appeal, but in 2021, the accrediting agency for the schools withdrew approval, citing performance failures, and the Department of Education soon after tightened the screws on federal aid, precipitating the schools’ closure.

CEHE is a mess. It no longer runs any schools or gets any federal aid; instead its functions seem to be limited to trying to get former students to pay back the sketchy, high-interest private loans the school peddled, and engaging in legal disputes with the federal government; these include a pending fraud lawsuit filed by a CEHE whistleblower and joined by the Justice Department, an investigation of CEHE’s private loans by the Consumer Financial Protection Bureau, and a lawsuit for $500 million brought by CEHE against the government alleging the schools were “a victim” of a campaign by the Department of Education “in coordination with ideological confederates… to cripple and close as many private career colleges as possible.” The Department also has suspended CEHE CEO Eric Juhlin from federal contracting.

— Another of the worst predatory for-profit schools is Ashford University, whose corporate owner Zovio pursued several different schemes for a non-profit conversion before finally selling the college to the University of Arizona, whose president, Robert Robbins, had been pressured by state regents to expand its online offerings.

Zovio’s scheme was to hide behind the prestige and political power of a big state university and yet keep getting for itself hundreds of millions off the school, now called University of Arizona Global Campus, through a long-term contract to provide recruiting, academic, and other services.

But that plan was thwarted after a California judge, in 2022, found Zovio liable for blatant deceptions of Ashford students and imposed $22 million in penalties. By law, the California judgment should compel the Department of Education to terminate federal aid to the school. Although Zovio pursued an appeal, it was discredited, bowed out of its contract to serve UAGC, transferred its infrastructure to the University of Arizona, and shut down.

But, with Zovio out of the picture, what was obvious to some even before the deal closed seems to have played out: Most of what Arizona had purchased, most of what made money, was not some supercharged high tech education platform but instead a predatory playbook and a staff trained to execute it. UAGC may not be able to pay its bills even if it keeps up with Ashford’s old predatory practices, but it almost certainly can’t do so if it tries to go straight. In November, President Robbins admitted that the University of Arizona’s overall financial situation is fragile, with cash reserves below minimum levels. Robbins said the school had “overinvested,” and school document revealed that one such exertion was the deal to buy Ashford, which “added $265.5 million in operating costs…”

Arizona’s financial woes from the Ashford deal may grow. Former Ashford students say they were ripped off and, as a result, have applied to have their federal student loans cancelled under a provision of law called borrower defense to repayment. In August, the U.S. Department of Education said it would cancel $72 million worth of loans because of Ashford’s deceptions. The Department also said it would use its legal powers to recoup those funds from Ashford’s owner, meaning the University of Arizona. UA says in response it had “absolutely no involvement in, and is not directly or indirectly responsible for, the actions of Ashford and its parent company” and will be “assessing its options.” But, reading the school’s agreement with Zovio, Arizona may be out of luck on that score.

— In contrast to Zovio’s fate, Graham Holdings has not been forced out of the 2017 deal in which it sold predatory for-profit Kaplan University to an Indiana state institution, Purdue University. Graham continues to hold a contract to provide a wide range of services to the school, now called Purdue University Global — a deal that Purdue is locked into for a 30-year term.

The Graham/Kaplan schools repeatedly faced law enforcement problems for predatory abuses against students before the sale. But the schools did better exercising political influence: The company’s head, Donald Graham, is a hyper-connected Washington insider; the business, long run by his family, was previously called The Washington Post Company, before it sold the newspaper to Jeff Bezos. Graham exploited his power and connections in DC to become the most effective lobbyist pressuring the Obama administration and Congress not to push too hard on for-profit college accountability; his protege Jeffrey Zients held key positions in the Obama White House, as did Anita Dunn, whom, once she left government, Graham hired to tell his schools’ supposedly compelling story to lawmakers. Dunn and Zients are now perhaps the two most powerful staffers in the Biden White House.

Having utilized his tight connections to key Democrats in the Obama years, Graham then took advantage of the lax regulatory environment under Republicans Trump and DeVos to do his troubling non-profit conversion deal with another top Republican politico, then-Purdue president Mitch Daniels, a former Indiana governor and White House official, who may have been dazzled by Graham’s big money ties, including his status as an ex-Facebook board member, and seen Kaplan as the road to a high-tech future.

But this effort to put state college lipstick on a for-profit pig may be failing as well. As Forbes noted last month, Graham Holdings‘ November filing with the SEC says Purdue Global owes the company $127.8 million — perhaps more than the school, structured as a non-profit associated with Purdue University, would be able to pay. Cutting costs at the school in order to pay Graham Holdings’ fees would likely mean lower-quality educational programs. Boosting enrollment for lower-quality programs would likely mean accelerating the deceptive recruiting practices, targeted at low-income Americans, that sullied Kaplan in the first place. Doing all of that at a time when the Biden administration, to its great credit, is working diligently to hold predatory schools accountable would be risky.

Don Graham’s best shot at continuing to make millions off Purdue Global may be for his long-time allies in the Biden administration to fail this year, and give way again to a president Trump, who once ran his own scam real estate school and likely would identify with Graham’s sense of victimhood about the persecutions of great for-profit educators.

— Finally, there is ultra-wealthy Arthur Keiser and his Keiser University, whose 2011 conversion from for-profit to non-profit was comparable to Carl Barney and CEHE: a sale of the for-profit school owned by Keiser, at a remarkably high valuation, to a non-profit controlled by Keiser. In addition to the inflated loan payments Keiser has since received from the non-profit, there are a range of businesses owned by Keiser that sell various services to the non-profit. Even worse, as we have documented, there is a highly questionable mingling of resources and personnel between the non-profit Keiser University and Southeastern College, another for-profit school owned by Arthur Keiser and his wife.

Keiser University seems to have come the closest to thriving after a shady non-profit conversion, but its troubles are now growing.

Arthur Keiser has gone all the way to the U.S. Supreme Court, with his expensive lawyers trying, but so far failing, to block a landmark court settlement aimed at cancelling the student loan debt of hundreds of thousands of ex-students who have filed borrower defense claims, saying they were deceived by their schools. His complaint is that Keiser University was, for purposes of the deal, unfairly placed by the U.S. Department of Education on a list of presumptively bad-acting colleges when, he insists, “There’s no evidence of misconduct.”

But Keiser’s claim of innocence is just another deception.

Like all the other schools with troubling conversions, Keiser University also has repeatedly gotten in trouble with law enforcement, and settled claims, including with then-Florida attorney general Pam Bondi and with the U.S. Justice Department, over allegations of deceptive and unlawful recruiting practices. And recent staff members have told us about predatory behavior still happening at the school, including recruiting of low-income people seemingly unprepared for college programs and of people with insufficient English language skills to understand the course work.

Keiser University also has been in trouble recently with three different accreditors of specific school programs, who have placed the school on warning, probation, or show cause status due to concerns about matters including program effectiveness and certification exam passage rates.

The non-profit conversion also has, finally, gotten Keiser University in trouble; the school admitted under congressional questioning in 2021 that the IRS imposed a penalty on the school for improperly steering profits to Arthur Keiser by entering into leases above fair market value with Keiser-related for-profit companies. Senior Democrats in Congress, including senators Dick Durbin (D-IL) and Elizabeth Warren (D-MA) have called on the U.S. Department of Education to investigate Keiser’s schools, which have received billions in taxpayer-funded student financial aid.

And, in November 2022, the Department determined that Keiser University’s accreditor, SACS, was out of compliance with numerous federal regulations and directed it to provide more information regarding its oversight of Keiser University and the school conversion to non-profit.

As part of the Department of Education’s regular oversight process for accreditors, I recently wrote to the Department, for a second time, urging it to hold SACS accountable unless it takes steps to address the conversion deal and predatory practices at Keiser’s schools. I hope that will happen, and that the Department itself will take steps to protect students by imposing conditions on Keiser’s future receipt of federal aid.

— Conversion from for-profit to non-profit has not prevented serious financial and / or legal problems at all of the schools we’ve discussed. In recent years, government regulators, accreditors, courts, and students have seen through the conversions, recognizing that predatory for-profit schools — with greedy owners, deceptive practices, poor value educational programs, and low return on student and taxpayer investment — remain predatory schools even when dressed up as non-profit colleges or big state universities. (The conversion of another huge predatory chain, EDMC, to non-profit also has been a disaster.)

Yet somehow the president of the University of Idaho, Scott Green, continues to insist he will be serving his school, and students, by acquiring, through an affiliated new non-profit, the giant for-profit University of Phoenix from huge private equity firm Apollo Global Management. Green remains determined to buy and run Phoenix despite Phoenix’s long and continuing record of abuses and law enforcement problems, despite the enormous potential liability Idaho might assume for debt cancellation for former Phoenix students, and despite opposition from many leaders in his own state, as well as advocates for students across the country. If Green — whose team keeps claiming, falsely, that Phoenix is under honest new management — and the Idaho state board of education can’t look objectively at the evidence that past conversions have been a moral disgrace, and a disaster for school operators, as well as students and taxpayers, then others in his state, the University of Idaho’s accreditor, and the U.S. Department of Education, should act to block the deal.

Monday, April 3, 2023

Higher Education FOIA Requests to US Department of Education

The Higher Education Inquirer has made a number of Freedom of Information Act (FOIA) requests to the US Department of Education.  Here's our current list.  

 

23-01436-F 

The Higher Education Inquirer is requesting copies of the current contracts between the US Department of Education and Maximus (including but not limited to subsidiaries such as AidVantage). If this is not possible we would like the reported dollar amount for each contract. This request is part of a larger effort to assess the student loan debt portfolio. (Date Range for Record Search: From 01/01/2010 To 04/03/2023)

23-01426-F  

The Higher Education Inquirer is requesting the dollar amount of student loan funds issued to for-profit colleges each year from 1972 to 2021.  We will accept interim or partial data.  (Date Range for Record Search: From 01/01/1973 To 04/03/2022)


23-01369-F  
 
The Higher Education Inquirer is requesting an estimate of the number of student loans in the student loan portfolio that originated (1) before 1978, (2) before 1983, (3) before 1988, and (4) before 1993.  This is part of a larger effort to understand the estimated $674B in unrecoverable student loan debt.   (Date Range for Record Search: From 01/01/2023 To 03/28/2023)

23-01324-F  
 
The Higher Education Inquirer is requesting a count of the number of Borrower Defense to Repayment claims against South University and the Art Institutes, in the Consumer Engagement Management System (CEMS) up to January 1, 2023.  We would also like to know if their parent company, Education Principle Foundation (EPF), is listed as the owner of both schools in the CEMS computer database.   (Date Range for Record Search: From 01/01/2023 To 03/22/2023)

23-01263-F
 
The Higher Education Inquirer is requesting a list of all the variables/categories in the Consumer Engagement Management System (CEMS).  CEMS is mentioned in FOIA 22-01683F filed by the National Student Legal Defense Network.   (Date Range for Record Search: From 01/01/2023 To 03/16/2023)

23-00865-F 
 
We are requesting an accounting of US Department of Education Borrower Defense to Repayment (BD) claims against the University of Phoenix.  Specifically, we are asking for the (1) number of BD claims, (2) the number processed, and (3) the number approved.  The date range is from February 20, 2016 to January 26, 2023. If there is a reasonable way to estimate the total dollar amount in a timely manner, we would also like that.  This request is similar to FOIA request 22-03203-F, and is a result of discovering that the University of Arkansas System has been in negotiations to acquire University of Phoenix through a nonprofit organization.   (Date Range for Record Search: From 02/20/2016 To 01/26/2023)
 
Related links:
 
 
 
 

 
 
 

Friday, September 15, 2023

Fraud Claims Against University of Phoenix Continue to Grow

The Higher Education Inquirer received a FOIA response today from the US Department of Education stating that 73,740 consumer fraud claims have been filed against the University of Phoenix. These claims have been made through the Department of Education's Borrower Defense to Repayment program.

The Sweet v Cardona lawsuit, concluded earlier in 2023, allowed for about 19,000 claims to be settled immediately--in favor of student debtors and against the University of Phoenix. Another 15,000 or so cases are supposed to be expedited as a result of the federal ruling.  

23-02373-F Final Response

We estimate that the potential liability of these immediate claims to be $200M-$600M with another $500M-$1.5B for the remaining cases. The higher estimates are based on the median federal loan debt among borrowers who completed their undergraduate degree ($32,421) and a study by Adam Looney and Constantine Yannelis that indicated University of Phoenix debtors, on average, paid off almost nothing of their principal. The authors also estimated that total student loan debt from more than a million University of Phoenix debtors was $35B. 

The Department of Education has not presented any estimates on the total debt by University of Phoenix students or its costs to the US government.  

Thousands of new cases continue to be filed. From January 2015 through January 1, 2022, there were 32,040 Borrower Defense claims made against the University of Phoenix. An additional 41,700 claims were filed between 2022 and August 2023. 

Idaho Sale

University of Phoenix's current owners are Apollo Global Management and Vistria Group, who have been trying to unload the online robocollege for years. The University of Idaho has been the most recent target, but the sale is far from being consummated.  The entire deal is expected to cost $685M. Idaho Attorney General Raul Labrador has filed a lawsuit to stop or at least slow down the acquisition. And members of the Idaho Legislature continue to have questions.

In order to shield itself from liability the University of Idaho created a non-profit organization called 43 Education. But the state university may be responsible if the non-profit fails to make enough money to repay the bondholders of the new non-profit. 

The liability of these Borrower Defense claims to the current or future owners of the University of Phoenix seems possible in light of a recent statement by Department of Education Undersecretary James Kvaal. Kvaal said the University of Arizona Global Campus may be liable for the misdeeds of Ashford University (UAGC's former name). The University of Arizona purchased Ashford in 2020 for one dollar. 

Related articles:

Feds Cancel Loans for 2,300 Students Scammed by Ashford U. So Why Does the School Still Get Tax Dollars? (David Halperin)

University of Phoenix and the Ash Heap of Higher Ed History

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

The Growth of "RoboColleges" and "Robostudents"

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

 


Wednesday, October 2, 2024

What would a second Trump administration mean for higher education? Summing up Project 2025 (Bryan Alexander)

[Editor's Note: This article first appeared at BryanAlexander.org.]

What happens to higher education if Trump wins November’s election?

We’ve been exploring this question over the past year, including months of reading, analysis, reflection, and conversation about Project 2025 might mean for higher education. Today I’d like to sum up what we found.

The book, Mandate for Leadership, addresses academia directly on multiple levels. I’ll break them down here. The implications for the broader society within which colleges and universities exist – that’s a subject for another post.

I’ve organized the various ideas and threads into several headers: the Department of Education, higher education economics, international education and research, research supported and opposed, military connections, sex education, and anti-intellectualism.

Higher education and the Department of Education Many accounts of Project 2025’s educational impact draw attention to its attack on the Department of Education, which makes sense, since this is where the document focuses its academic attention. to begin with, Mandate for Leadership wants to break up the DoE and distribute its functions to other federal units. For example, the work the Office for Postsecondary Education (OPE) does would move to the Department of Labor, while “programs deemed important to our national security interests [shift] to the Department of State.” (327).

It would revise the student loan system to a degree. “Federal loans would be assigned directly to the Treasury Department, which would manage collections and defaults.” (327-330) Income-based repayment schemes would continue, but with restrictions. (337-8) Project 2025 would end the Biden team’s Public Service Loan Forgiveness program, along with “time-based and occupation-based student loan forgiveness” plans. (361) More ambitiously, the new government could just privatize loans. (353)

The chapter’s author also calls for “rejecting gender ideology and critical race theory” in the department or through its successor units. (322) This might also proceed via changes to one law, as a new secretary would “[w]ork with Congress to amend Title IX to include due process requirements; define “sex” under Title IX to mean only biological sex recognized at birth; and strengthen protections for faith-based educational institutions, programs, and activities.” (333) This culture war move could have another legal feature, given the call to amend FERPA in order to make it easier for college students to sue the government for privacy violations, in response to school support of transgender and nonbinary students. (344-346)

The obverse of these moves is having the new DoE or its replacements “promulgat[ing] a new regulation to require the Secretary of Education to allocate at least 40 percent of funding to international business programs that teach about free markets and economics.” Additionally, the government would “require institutions, faculty, and fellowship recipients to certify that they intend to further the stated statutory goals of serving American interests,” although it’s unclear what that would mean in practice. (356)

This section’s author, Lindsay Burke, also wants the next administration to change its relationship with post-secondary accreditors. She supports Florida’s new policy of requiring public universities to cycle through accrediting agencies. (332) Burke also wants to encourage new accreditors to start up. (355) Her chapter further calls for a new administration to prevent accreditation agencies from advocating for diversity, equity, and inclusion (DEI) work on campuses. (352)

The economics of higher education The Department of Education chapter would see a revamped Department of Education or its successors “[r]equir[ing]… ‘skin in the game’ from colleges to help hold them accountable for loan repayment.” (341) I can’t see how this would work in detail. Her new federal administration would also reduce funding to academic research by cutting reimbursement for indirect costs. (355)

That section also wants to reduce the labor market’s demand for post-secondary degrees. Under the header “Minimize bachelor’s degree requirements” we find: “The President should issue an executive order stating that a college degree shall not be required for any federal job unless the requirements of the job specifically demand it.” (357). Later on in the book, the Department of Labor section section also calls on Congress to end college degree requirements for federal positions. (597) That chapter wants to boost apprenticeships, mostly likely in competition with college and university study. (594-5)

International research and education. Cutting down immigration is a major Project 2025 theme, and the book does connect this to academia. It calls out international students like so:
ICE should end its current cozy deference to educational institutions and remove security risks from the program. This requires working with the Department of State to eliminate or significantly reduce the number of visas issued to foreign students from enemy nations. (141)

First, this would impact many would-be students’ careers. Second, implementing such a policy would likely depress international student interest.

Project 2025 consistently focuses on China as America’s enemy, and this means it wants United States higher education to decouple from that adversary or else face consequences. For example, the introduction warns that “[u]niversities taking money from the CCP should lose their accreditation, charters, and eligibility for federal funds.” Later in the text is some language about the government and universities supporting American but not Chinese research and development. (100) Another section sees “research institutions and academia” playing a role in Cold War 2.0:
Corporate America, technology companies, research institutions, and academia must be willing, educated partners in this generational fight to protect our national security interests, economic interests, national sovereignty, and intellectual property as well as the broader rules-based order—all while avoiding the tendency to cave to the left-wing activists and investors who ignore the China threat and increasingly dominate the corporate world. (emphases added; 218)

Later on, the Department of Justice discussion offers this recommendation:

key goals for the China Initiative that included development of an enforcement strategy concerning researchers in labs and universities who were being coopted into stealing critical U.S. technologies, identification of opportunities to address supply-chain threats more effectively, and education of colleges and universities about potential threats from Chinese influence efforts on campus. (556)

This seems to describe increased DoJ scrutiny over colleges and universities. I’m not sure what “education… about potential threats” means, although I suspect it might include pressure on academics.

The Department of Commerce section wants to “[t]ighten… the definition of ‘fundamental research’ to address exploitation of the open U.S. university system by authoritarian governments through funding, students and researchers, and recruitment” (673) More succinctly, that chapter calls for strategic decoupling from China (670, 674). We can imagine a new federal administration – along with, perhaps, state governments, businesses, nonprofits, and foundations – asking academia to play its role in that great separation. One of the trade policy chapters broods about how “more than 300,000 Communist Chinese nationals attend U.S. universities” and it’s hard not to see this as a call for reducing that number. (785)

That chapter’s author, Peter Navarro, condemns one leading American university for allegedly enabling Chinese power:

Huawei, well-known within the American intelligence community as an instrument of Chinese military espionage, has partnered with the University of California–Berkeley on research that focuses on artificial intelligence and related areas such as deep learning, reinforcement learning, machine learning, natural language processing, and computer vision, all of which have important future military applications.28 In this way, UC–Berkeley, whether unwittingly or wittingly, helps to boost Communist China’s capabilities and quest for military dominance. (785-6)

I can’t help but read this as a call for federal scrutiny of academic international partnerships, with sanctions in the wings.

Project 2025 looks at other regions of the globe and wants higher education to help. For example, the State Department chapter calls on American campuses to assist its African policy: “The U.S. should support capable African military and security operations through the State Department and other federal agencies responsible for granting foreign military education, training, and security assistance.” (187)

Other federal units come in for transformation which impacts colleges and universities. One chapter calls for “reinstituti[ng] the National Security Higher Education Advisory Board.” (Wikipedia; 218) The USAID chapter would cut some post-secondary support, based on the argument that “[w]e must admit that USAID’s investments in the education sector, for example, serve no other purpose than to subsidize corrupt, incompetent, and hostile regimes.” (275)

Support for and opposition to research Project 2025 consistently calls for research and development, at least in certain fields. The Department of Energy chapter enthusiastically promotes science. That chapter also tends to pair research with security, so we might infer increased security requirements for academic energy work. Alternative energy and decarbonization research would likely not receive federal support from McNamee’s departments, as he might see them as a “threat to the grid.” (373)

The document also calls for transparency many times, which might benefit academics as it could (should it occur) give greater access to more documentation. One passage actually uses the language of open source code: “True transparency will be a defining characteristic of a conservative EPA. This will be reflected in all agency work, including the establishment of opensource [sic] science, to build not only transparency and awareness among the public, but also trust.” (417)

On the flip side, Project 2025 opposes climate research throughout. For a sample of the intensity of this belief,

Mischaracterizing the state of our environment generally and the actual harms reasonably attributable to climate change specifically is a favored tool that the Left uses to scare the American public into accepting their ineffective, liberty-crushing regulations, diminished private property rights, and exorbitant costs. (419)

That passage exists in the Environmental Protection Agency chapter, and fits into its author’s desire to cut back the EPA in general, but particularly to end its support for academic research. There are specific examples, such as “[r]epeal[ing] Inflation Reduction Act programs providing grants for environmental science activities” (440). This is also where we see a sign of Project 2025’s desire to get more political appointees into federal positions. There would be “a Science Adviser reporting directly to the Administrator in addition to a substantial investment (no fewer than six senior political appointees) charged with overseeing and reforming EPA research and science activities.” (436) That would have further negative effects on academic work.

Later on, the Department of Transportation chapter calls for shutting down the National Oceanographic and Atmospheric Administration (NOAA). Why? NOAA is “one of the main drivers of the climate change alarm industry and, as such, is harmful to future U.S. prosperity.” (675) Faculty, staff, and students who rely on NOAA would lose out.

Military and civilian higher education There are many connections here, reflecting a view that all of academia can contribute in an instrumental way to American military and foreign policy goals, while also being reformed by a new administration. For example, the text calls for reforming post-secondary military education, asking a new government to “[a]udit the course offerings at military academies to remove Marxist indoctrination, eliminate tenure for academic professionals, and apply the same rules to instructors that are applied to other DOD contracting personnel.” (104)

There’s also an idea for creating a new military academy, a Space Force Academy:
to attract top aero–astro students, engineers, and scientists and develop astronauts. The academy could be attached initially to a large existing research university like the California Institute of Technology or MIT, share faculty and funding, and eventually be built separately to be on par with the other service academies. (119)

Related to this, a later discussion calls for the creation of a new academic institution dedicated to financial warfare:

Treasury should examine creating a school of financial warfare jointly with DOD. If the U.S. is to rely on financial weapons, tools, and strategies to prosecute international defensive and offensive objectives, it must create a specially trained group of experts dedicated to the study, training, testing, and preparedness of these deterrents. (704)

Earlier in the book there’s some discussion of reforming the Pentagon’s purchasing systems calls for spreading some Defense Acquisition University (DAU) functions to “include accreditation of non-DOD institutions” – i.e., potentially some civilian institutions. (98)

Project 2025 would reverse certain Biden- and Obama-era human rights provisions for military academies’ faculty, staff, and students. It calls for “individuals… with gender dysphoria [to] be expelled from military service…” (103)

Sex education, research, support for student life All of this appears under threat. Here’s the relevant passage from the introduction, a shocking response to pornography: “Educators and public librarians who purvey [pornography] should be classed as registered sex offenders. And telecommunications and technology firms that facilitate its spread should be shuttered.” (5) This seems aimed at K-12 schools, where so much culture war battling has occurred, but we shouldn’t assume higher education would escape. Remember that it’s a common strategy for critics to label sex education and research materials as porn.

Anti-intellectualism Project 2025 respects knowledge and skills insofar as they assist with making a new administration succeed, but is at the same time very skeptical of their role in broader society, when formally recognized. It wants universities to develop new technologies, but not to advance DEI. For a clear sense of what I’m talking about, here’s the introduction’s take on credentials:

Intellectual sophistication, advanced degrees, financial success, and all other markers of elite status have no bearing on a person’s knowledge of the one thing most necessary for governance: what it means to live well. That knowledge is available to each of us, no matter how humble our backgrounds or how unpretentious our attainments. It is open to us to read in the book of human nature, to which we are all offered the key just by merit of our shared humanity. (10)

One could respond that most of the book’s authors possess intellectual sophistication and/or advanced degrees and/or financial success, but that’s part of the conservative populist paradigm.

Summing up, Project 2025 presents multiple challenges, threats, and dangers to American higher education. Proposed policies strike at academic teaching, research, finances, autonomy, and some of the most vulnerable in our community. It outlines routes for expanded governmental surveillance of and action upon colleges and universities, not to mention other parts of the academic ecosystem, such as accreditors and public research entities.

Keep in mind that Project 2025 isn’t necessarily a total guide to a potential Trump administration. The candidate has denounced it and led the publication of another platform. I’d like to explore that document next. We should also track Trump’s various pronouncements, such as his consistent desire to deport millions of people. For that alone we should expect a major impact on higher education.

Yet Project 2025 draws deeply on Republican politicians and office holders, not to mention conservative thinking. It seems fair to expect a new administration to try realizing at least a chunk of it, if not more.

What do you think of this sketch of a potential Trump administration?

Monday, September 24, 2018

Higher Learning Commission: Accreditation Is No Sign Of Quality

"Yet in practice, accreditors—who are paid by the institutions themselves—appear to be ineffectual at best, much like the role of credit rating agencies during the recent financial crisis." David Deming and David Figlio in Accountability in US Education: Applying Lessons from K–12 Experience to Higher Education (2016)

As a watchdog of America's subprime colleges and a monitor of the College Meltdown, I can tell you that institutional accreditation is no sign of quality. Worse yet, accreditation by organizations such as the Middle States Association, Western Association of Schools and Colleges, and the Higher Learning Commission is used by subprime colleges to lend legitimacy to their predatory, low standard operations. 

[Image below: DeVry University uses its accreditation to lend credibility to its brand.]
According to the US Department of Education, the Higher Learning Commission (HLC) accredits 946 Title IV schools, including some of the nation’s most well-respected public and private colleges. As the America’s largest accreditor, it is a gatekeeper to its member schools collecting close to $40B annually in Title IV funds and many billions more from the Department of Defense (Tuition Assistance) and Department of Veterans Affairs (VA) GI Bill.

The Higher Learning Commission monitors excellent schools like University of Chicago, University of Colorado, University of Michigan, Notre Dame, and University of Wisconsin. But it also accredits a number of subprime schools, including Colorado Technical University, DeVry University, University of Phoenix, Walden University, National American University, and Purdue University Global.
On the three pillars of regional accreditation: compliance, quality assurance and quality improvement, the Higher Learning Commission gets a failing grade by supporting subprime colleges.


Insiders in higher education have been well aware of the corruption inherent in accreditation, but few speak of it publicly. The way the system works, accreditors like the Higher Learning Commission receive most of their their money from member schools, which gives them a vested interest in keeping their customers viable, even among their worst or most predatory performers.

Despite protests from the American Association of University Professors, The Higher Learning Commission has been accrediting for-profit colleges since 1977 and ethically questionable schools for nearly 20 years. In 2000, Executive Director Steven Crow defended the HLC's accrediting of Jones University, an online for-profit college that is no longer in operation.

Rather than acting as auditors, higher education accreditors for decades have acted as shills for whomever they accredit, and that can include some of the most predatory and substandard schools in America.
"I really worry about the intrusion of the profit motive in the accreditation system. Some of them, as I have said, will accredit a ham sandwich, and I think it's very important for us to make sure that they're independent and not being bought off by the Internet." -Mary A. Burgan, General Secretary of the American Association of University Professors (2000)
Many accreditors are part of a larger organization called the Council for Higher Education Accreditation (CHEA), which acts more as a barrier than a supporter of educational quality.
So who's watching the accreditors? In reality, it's no one.
[Image below from CHEA shows Higher Learning Commission dues for member colleges. Over the last 30 years, the Higher Learning Commission has received millions of dollars from subprime schools like University of Phoenix.]

The US Department of Education does very little or nothing in terms of overseeing higher education quality, and the Trump-DeVos administration has done a great deal to roll back the modest regulations enacted by President Obama.

In July, an internal investigation showed that the US Department of Education was not properly watching the accreditors, and it's very likely the situation will worsen. The agency is in the process of reviewing accreditation and accreditors, but the foxes are submitting more comments then the hens.

Friday, March 25, 2022

Online Program Manager for University of Arizona Global Campus Facing Financial Collapse

Zovio (ZVO), the for-profit online program manager for University of Arizona Global Campus (UAGC)*, is facing a financial collapse.

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 Tuesday, March 29, 2022, there are strong indications that ZVO has reached a point of no return in its balance sheet.


Zovio's Assets (2009-2021) Source: Macrotrends.net

Zovio's Annual Report is coming out weeks late, just before the Securities and Exchange Commission deadline, and ZVO has not presented any revenue numbers to relieve shareholder anxiety.

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.

Zovio Share Price, March 3-March 28, 2022 (Source: Seeking Alpha)
 

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.  

[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) 

Saturday, November 24, 2018

Ashford University Deceiving Consumers, Violating Department of Defense Regulations

dahneshaulis@gmail.com

Since its inception in 2005, Ashford University has been an overly priced, low value educational institution with questionable ethics and poor student outcomes.  As a result, servicemembers and veterans have filed a disproportionate number of complaints about the school through the Department of Defense, Department of Veterans Affairs, and the non-profit Veterans Education Success.[i][ii][iii]
Ashford and its parent company Bridgepoint Education (BPI) have also been the subjects of investigations,[iv] lawsuits, and legal and out-of-court settlements for a continuing series of unethical and illegal business practices: taking advantage of wounded service members[v], falsifying student retention data,[vi] robocalling prospective students,[vii] and deceiving students about private loans.[viii]  All of these practices violated elements of the Department of Defense’s Memoranda of Understanding (“DOD MOU”) signed by one or more Bridgepoint executives in 2011 and 2014.[ix]  

Recently, Ashford University and Bridgepoint have also been under scrutiny by VA for making false statements about the location of the school’s main business location.  While this may not be a violation of the DOD MOU, it does exemplify the company’s repeated unscrupulous behavior[x]

VA’s GI Bill Comparison Tool states that Ashford University has a 16 percent graduation rate and 23 percent student loan repayment rate.  The page carries a warning because of its problems with GI Bill certification in California, and its current lawsuit as a defendant against the State of California. [xi]
According to authors from the US Treasury and Stanford University, Ashford University also carries a 47 percent 5-year cohort default rate (CDR). [xii]

Despite its horrendous record, Ashford University has received hundreds of millions of dollars in DOD TA money and Department of Veterans Affairs GI Bill funds.  According to the Center for Investigative Reporting, almost all of Bridgepoint’s money comes from federal government programs, which also includes Pell Grants and federal student loans in addition to TA and GI Bill funds.[xiii]   

2017 State of California Lawsuit
In its recent 40-page civil complaint against Bridgepoint Education and Ashford University, the Attorney General of California stated that the company and its university systematically deceived consumers, including veterans, through:

(1) a high pressure sales culture,

(2) false or misleading statements concerning financial aid and costs of attendance,

(3) misrepresentations regarding transferability of credits, and

(4) misrepresentations regarding employment prospects.[xiv] [xv]

While all of these items are pertinent to service members and veterans, items 3 and 4 appear most applicable to stipulations in Ashford University’s DOD MOU.[xvi]
In Ashford University’s Memorandum of Understanding with the Department of Defense, the school  agreed to provide specific consumer information to servicemembers, including information about financial aid and transferability of credits.  Judging from the State of California’s civil complaint, there is no indication that Ashford was providing this information. 

To the contrary, Bridgepoint and Ashford employees systematically deceived consumers about financial aid and transferability of credits:

False or Misleading Statements Concerning Financial Aid and Costs of Attendance (pp. 11-16 in the State of California’s Civil Complaint)
“In its efforts to lure in prospective students, Ashford systematically made false or misleading statements about students’ ability to obtain federal financial aid and the school’s costs of attendance.”  
“For example, Admissions Counselors commonly told consumers that federal financial aid would cover all their costs of attending Ashford University, or that they would receive certain kinds of federal financial aid, when the Counselors either had no basis, for making those promises.” 
“At the same time, Ashford misrepresented to consumers that it could not be determine final financial aid awards until after enrollment, and then it failed to issue the final awards until it was too late for students to withdraw without liability.  This led many to incur unexpected debts for tuition and fees they owed due to a shortfall in their final award.” 
“In another repeated tactic, Admissions Counselors enticed consumers by telling them that they could use federal financial aid for non-educational expenses, even though federal law prohibits this conduct.” 
“Admissions Counselors also made numerous other representations concerning various aspects of financial aid eligibility, a complex topic on which they were unprepared to provide guidance, as well as the costs of attending Ashford.” 
“Unlike other schools, Ashford does not send financial aid award letters until after a student enrolls, giving Admissions Counselors ample opportunity to make false forecasts about financial aid in their sales pitches to consumers.”
“In one common form of representation, Ashford told prospective students who had not yet filled out a FAFSA or received a financial aid award letter that they would not have to pay any “out of pocket costs.” 
“For many consumers, these kinds of misrepresentations made Ashford University seem more affordable than it actually was….Students ended up owing Ashford unanticipated out-of-pocket balances, or had to take out more loans than they expected.

“Ashford also told students and prospective students that final determinations about financial aid could not be made until after the student enrolled, and it required students to enroll without first receiving a financial aid award letter.  Ashford then waited until students were well into their coursework to send the financial aid award letters.  In reality, it was possible for Ashford to make final determinations prior to enrollment, just as many other colleges and universities do. Waiting to process financial aid until after an enrollment allowed Ashford to prevent prospective students’ financial concerns from getting in the way of Admissions Counselor’s quests to close their sales.”  

Elements of the MOU pertaining to financial aid (pp. 4-5):

f. Before enrolling a Service member, provide each prospective military student with specific information to locate, explain, and properly use the following ED and CFPB tools:

(1)  The College Scorecard which is a planning tool and resource to assist prospective students and their families as they evaluate options in selecting a school and is located at:  http://collegecost.ed.gov/scorecard/.

 (2)  The College Navigator which is a consumer tool that provides school information to include tuition and fees, retention and graduation rates, use of financial aid, student loan default rates and features a cost calculator and school comparison tool.  The College Navigator is located at: http://nces.ed.gov/collegenavigator/.

 (3)  The Financial Aid Shopping Sheet which is a model aid award letter designed to simplify the information that prospective students receive about costs and financial aid so they can easily compare institutions and make informed decisions about where to attend school. The Shopping Sheet can be accessed at: http://www2.ed.gov/policy/highered/guid/aid-offer/index.html.

 (4)  The “Paying for College” webpage which can be used by prospective students to enter the names of up to three schools and receive detailed financial information on each one and to enter actual financial aid award information.  The tool can be accessed at: http://www.consumerfinance.gov/paying-for-college/.

g. Designate a point of contact or office for academic and financial advising, including access to disability counseling, to assist Service members with completion of studies and with job search activities.

(1)  The designated person or office will serve as a point of contact for Service members seeking information about available, appropriate academic counseling, financial aid counseling, and student support services at the educational institution;   (2) The point of contact will have a basic understanding of the military tuition assistance program, ED Title IV funding, education benefits offered by the VA, and familiarity with institutional services available to assist Service members. 

h.  Before offering, recommending, arranging, signing-up, dispersing, or enrolling Service members for private student loans, provide Service members access to an institutional financial aid advisor who will make available appropriate loan counseling, including, but not limited to: 
(1)  Providing a clear and complete explanation of available financial aid, including Title IV of the Higher Education Act of 1965, as amended. 
(2)  Describing the differences between private and federal student loans to include terms, conditions, repayment and forgiveness options. 
(3)  Disclosing the educational institution’s student loan Cohort Default Rate (CDR), the percentage of its students who borrow, and how its CDR compares to the national average.  If the educational institution’s CDR is greater than the national average CDR, it must disclose that information and provide the student with loan repayment data. 

Misrepresentations Regarding Transferability of Credits (pp. 16-23 in the State of California’s Civil Complaint)
“Ashford falsely told consumers that their prior credits would transfer into Ashford University.”
“Ashford also systematically misrepresented the extent to which Ashford University credits can transfer to other universities. Ashford’s Admissions Counselors routinely enticed prospective students with the promise that Ashford University offers them the flexibility to study online at a pace convenient to them, earning credits that they can later apply to other, less flexible, schools that the student was considering.”
“Ashford’s sales teams also told consumers that because Ashford University was regionally accredited, its credits were certain or likely to transfer to other schools….In other instances, Admissions Counselors have stated that Ashford University are accepted at specific schools, such as University of Southern California, UCLA, UC Berkeley, UC San Diego, and Harvard.” 
“Ashford also made misrepresentations regarding the transfer of credits from ongoing and future casework. Ashford University student and Army Reserve veteran P.M. was deceived by false promises that credits he earned at a community college while attending Ashford University would transfer to Ashford….As P.M. approached graduation at Ashford, he was alarmed to discover that Ashford had capped the amount of credits he could transfer….because Ashford broke its promise to accept all of the community college credits, P.M. had to spend additional time in school at Ashford University to make up for lost credits under the lower housing allowance. As a result he also fell behind in his rent, had to take another job to keep up with the bills, and his credit score suffered. Second, because GI Bill benefits are not unlimited, he wasted some of his veterans’ benefits by spending them on coursework he was unable to put toward a degree.”
This violates the following provision of the Ashford University’s DOD MOU:

“(1) Disclose its transfer credit policies and articulated credit transfer agreements before a Service member’s enrollment.  Disclosure will explain acceptance of credits in transfer is determined by the educational institution to which the student wishes to transfer and refrain from making unsubstantiated representations to students about acceptance of credits in transfer by another institution.” (p.7) 

Misleading and Deceptive Use of "Military Friendly" and "Best For Vets" Logos

Ashford University continues to use logos that are deceptive.  Promotional materials show that Ashford University claims to be "Military Friendly" and "Best For Vets."  But these designations are no longer valid.  


[iii] Veterans Education Success has reported 113 complaints from servicemembers and veterans regarding Ashford University.  https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/5a302b5df9619a75ac81f0b7/1513106270402/Final+Ashford+Memo+%28Public%29.pdf

[iv] Ashford University was a major focus of the PBS/Frontline documentary, College Inc. http://www.pbs.org/video/frontline-college-inc/

In 2011, in Senate Hearings, Senator Harkin referred to Ashford University as “an absolute scam.” https://www.insidehighered.com/news/2011/03/11/senate_hearing_on_for_profit_colleges_singes_accreditors_as_well_as_bridgepoint

[xv] Bridgepoint Education is also presumably under investigation by the State Attorneys General in New York and North Carolina.  This is in addition to the company’s settlement with the Consumer Financial Protection Bureau.