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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.

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Saturday, January 25, 2025

How University of Arizona Global Campus’ Online Recruitment Ads Drain Its Finances (Jeremy Bauer-Wolf)

In 2020, the University of Arizona acquired Ashford University, an online for-profit college that a California court later found guilty of having deceived students about job prospects, transfer opportunities, and degree costs.

Feeling pressured to better compete in the online education market — especially as Arizona State University broadened its virtual options — University of Arizona leaders recast Ashford as the University of Arizona Global Campus, or UAGC.

Administrators pledged to rehabilitate UAGC and abandon the exploitation that landed the former Ashford in legal hot water. UAGC, as its president said in 2022, is “well-positioned to provide adult learners with affordable college credentials that can better prepare them for careers in a rapidly evolving global economy.”

But beneath the rebranding efforts, problems remain. The University of Arizona has spent massively on marketing UAGC, as an audit that consultancy EY conducted last year revealed, a hallmark tactic of predatory for-profit institutions that dress up their junk degrees as prestigious offerings.

UAGC runs extensive and expensive ad campaigns on Google and Facebook, yet fewer than 1% of those reached enroll. This amounts to the university paying $11,521 for every student enrolled from those campaigns, the audit shows.

For context, this is almost as much as the University of Arizona’s in-state tuition and fees per student in the 2023-24 academic year, which federal data estimates to be about $13,000.

And one higher ed consultancy, RNL, found that in 2022, the median cost of recruiting an undergraduate student, minus personnel expenses, was only $1,652 for a four-year private college and $282 at a four-year public institution (though proponents of online education argue this is comparing apples to oranges).

But ultimately, UAGC’s investment has not improved enrollment. It continues to bleed, as it did in Ashford’s later days, dropping from about 107,000 students in fiscal year 2015 to 51,000 in fiscal year 2023.

Criticism from some of the University of Arizona’s faculty has also erupted. In the waning days of 2024, Nolan Cabrera, a professor at the university’s Center for the Study of Higher Education, wrote a public warning to students, urging them not to enroll in UAGC.

Cabrera told New America in a later interview he went public with his criticisms to protect students — and the University of Arizona’s reputation. UAGC, he said, is only hurting students with poor-quality programs, draining resources and sullying its standing as a top-class, R1 institution.

Blake Naughton, UAGC’s vice provost for academic affairs, teaching, and learning for online initiatives said in an emailed statement that “accreditors, government agencies, and other external reviewers” recognize “UAGC’s commitment to the quality of its degree programs.”

“UAGC has developed an innovative model that is validated through reaffirmations of quality by UAGC’s institutional and programmatic accreditors, which includes Quality Matters certification representing the gold standard in online courses, and enthusiastic partnerships with businesses and military employers,” Naughton said. “Further, UAGC faculty are leaders in the scholarship of online teaching and learning, regularly publishing and presenting on the efficacy of its ‘quality at scale’ model.”

The Creation of UAGC

Those inside and out of University of Arizona — state officials, faculty, college students and their advocates — were immediately skeptical of UAGC’s potential quality and value when the university acquired Ashford in 2020. The deal was a complex one that involved the University of Arizona creating a new nonprofit entity, which bought Ashford for $1. In return, UAGC would provide almost 20% of annual tuition revenue to Ashford’s former parent company, Zovio, though that arrangement later fell apart in 2022.

Before the acquisition, Ashford followed the blueprint of one of the most notorious for-profit colleges in American history: the University of Phoenix. Andrew S. Clark — an executive who contributed to the University of Phoenix’s rise — and the company he later worked for, Bridgepoint, replicated deceptive practices around credit transfers, financial aid, and recruitment at Ashford.

In 2017, California’s attorney general alleged Ashford misled prospective students about their chances of securing financial aid, the cost of attendance, the transferability of credits, and how well its programs prepared them for certain careers. The attorney general also accused it of deceiving investors and the public by exaggerating the percentage of working alumni who said their degree helped them in their current jobs.

This complaint was still unresolved by the time University of Arizona acquired it in 2020.

In 2022, the court ruled against Ashford and Zovio. The judge in the case was persuaded by estimates that Zovio made roughly 1.2 million misleading calls to potential students from March 2009 to April 2020.

The University of Arizona painstakingly crafted a public relations campaign to try to cleave UAGC’s reputation from Ashford’s. This was despite widespread concerns among its faculty and staff about Ashford, Cabrera said in an interview.

The administration never truly responded to those fears that Ashford was still peddling poor-quality education, he said. In fact, negotiations surrounding Ashford were so secretive that University of Arizona representatives who were involved with them signed non-disclosure agreements, obfuscating details of the deal, Cabrera argued. (The University of Arizona has said because Zovio was a publicly traded company, the institution “was required to undertake its work on a confidential and ‘need to know’ basis.”)

“You know the old adage, ‘you get what you pay for’?,” Cabrera said, referring to the $1 price tag of the acquisition. “That should tell you everything you need to know.”

UAGC has maintained an anemic graduation rate, only reaching 15% to 20% after the University of Arizona’s acquisition, according to the audit. The University of Arizona’s graduation rate stands between 60% to 70%. The retention rate of full-time students has also only improved modestly, from 24% in 2019 to 30% in 2022, according to federal data.

Mitch Zak, a University of Arizona spokesperson, said in a statement that it and UAGC have different academic models, thus their graduation rates aren’t comparable.

“The majority of UAGC students are working adults and military service members with varying priorities and responsibilities, which results in their taking fewer courses per year than traditional U of A students,” Zak said. “Non-traditional online students nationwide are not expected to graduate in the same timeframe as traditional university undergraduates.”

Recent news reports have also detailed how, like Ashford’s graduates, some UAGC students have said they can’t find sound jobs after leaving and alleged that the institution misled them about the value and cost of their degrees.

Cabrera said the University of Arizona’s leaders have not prioritized improving student outcomes, but rather an online education arms race and particularly beating out Arizona State, reflecting the longstanding rivalry between the two most prominent public universities in the state.

Cabrera said the two institutions are in constant competition — in public college rankings, like U.S. News & World Report’s, in enrolling more students, and other peripheral aspects of their academics, such as who employs more Nobel Prize laureates.

But if the University of Arizona’s leadership was so worried about its reputation, it shouldn’t have scooped up Ashford, Cabrera argued. Its association with Ashford and its shoddy education demeans the value of a University of Arizona degree, too, he said.

Zak pushed back against Cabrera’s allegation, saying that “priority is to ensure that UAGC is meeting the needs of its students, most of whom could not access traditional higher education.”

He also separately in his statement criticized Cabrera, saying the professor is not an expert in online education and did not reach out to UAGC leaders or faculty “to learn more about the differences between the U of A and UAGC as well as the complexities associated with providing access to higher education to working professionals.”

Major Marketing Costs

Amid this firestorm, UAGC’s enrollments continue to slip.

Zak argued this decline “was expected and planned for during the transitional period” as the institution works to integrate the former Ashford into the University of Arizona. He said UAGC is trying to lift enrollment, including through programs that help stopped out students return to college.

Still, the enrollment downturn raises questions in particular about the efficiency of its marketing efforts.

While the analysis doesn’t reveal the full extent of UAGC’s marketing splurge, it likely devotes hundreds of millions of dollars to it, based on figures in the EY audit. A similar institution to UAGC, the University of Maryland Global Campus, also dropped $500 million on just two six-year advertising contracts, according to a separate audit.

UAGC is investing significantly in lead generation, a strategy colleges have tried for more than a decade. They pay for advertisements to appear on webpages, particularly social media platforms, that typically summarize a program and also try to entice prospective students to click a new link for more information.

That ad takes prospects to a separate webpage, where they can fill in their name and other information, becoming a “lead” that a college can try to convince them to enroll.

Yet UAGC’s use of lead generation has been astonishingly fruitless, the audit shows.

Fewer than 1% of students reached through UAGC’s top five paid marketing sources, including Google and Facebook, actually enroll. The numbers concerning Facebook are particularly bleak — only 0.5% of prospective students end up enrolling at UAGC after clicking an advertisement on the platform. The auditor said this means it effectively costs the university more than $34,000 in marketing dollars just for one person to enroll from Facebook.

Even UAGC’s most successful lead generation source — Google search ads — converted just 3% of prospects, with each enrollment costing more than $7,500.

These figures are even more staggering considering UAGC pays to find 85% of its prospects, according to the audit. By contrast, Arizona Online — the university’s self-created online program, which still operates, in parallel to UAGC — buys just 50% of its student leads.

Zak said that UAGC has since “refined” its marketing to “prioritize efficiency and effectiveness,” but did not go into greater detail.

“UAGC has implemented a targeted approach in alignment with its mission of serving non-traditional learners,” Zak said. “UAGC is focused on retention and success and focuses on students who are most likely to benefit from a flexible and supportive learning environment. UAGC leverages data analytics, audience segmentation, and advanced tracking mechanisms to help improve conversion rates and reduce marketing costs.”

He later said that UAGC serves nontraditional students like working adults, military members and first-generation college attendees.

“Reaching those students in a competitive marketplace requires a different approach than traditional four-year universities,” Zak said.

The University of Arizona has faced budget problems broadly and last year said it had a $177 million budget deficit, which it has since reduced significantly.

But for all the university’s publicity efforts around UAGC, prospective students recognize Arizona Online as part of the institution’s brand, more so than UAGC, the audit said. Maintaining both platforms has actually spurred “market confusion,” according to the audit.

To remedy this, the University of Arizona has angled to integrate UAGC and Arizona Online, and Zak pointed to a university statement last year that said the audit findings validate this merger.

Still, this “confusion” underscores broader marketing challenges, like relying heavily on lead generation, a strategy UAGC has leaned into despite the fact that experts have said it’s inefficient to boost enrollment.

In part, that’s because institutions don’t recognize that students won’t make life-altering choices, like where to attend college, based on what’s essentially a pop-up ad, two marketing experts wrote in a 2022 essay.

“Prospective students prudently take their time researching your programs’ offerings in addition to many others,’” they wrote. “They are not naïve, impatient or easily persuaded by glitzy ads and copy. They spend many months researching and deliberating.”

Worse, lead generation can be used for nefarious or even predatory recruitment efforts. Some lead generation companies, for instance, have caught consequences from the Federal Trade Commission, particularly those that target current and former military members.

What To Do Now?

Thus far, the University of Arizona Global Campus is a failed experiment, Cabrera said. He was inspired to publish his concerns about UAGC publicly after students enrolled in its programs began to reach out to him.

Students were distressed. They told him in emails and direct messages on social media that UAGC faculty in education programs couldn’t guide them properly. He said he lost count of how many students contacted him — he estimated more than 20 over an 18-month period.

“For all the political bickering, real students are getting hurt, real students getting harmed here,” Cabrera said. “They’re making a bet, but students are getting hurt in the process.”

The University of Arizona declined to comment on the UAGC students who contacted Cabrera. UAGC faculty later wrote a public rebuttal to Cabrera, arguing his piece was based on his “rather than on facts and thus lacked the academic rigor of factual data from credible sources.”

But the UAGC faculty piece did not refute specifically any data Cabrera cited, including numbers from the EY audit.

In Zak’s emailed statement, he said UAGC students “have access to academic support teams, career services, student access and wellness support teams, and a combination of tools, technology, and guidance to help them progress.”

Cabrera remains unconvinced.

He said the University of Arizona’s leaders have not fulfilled their promise to purge the educational sins of Ashford. The reality is that enrollment continues to plummet, while UAGC’s exorbitant spending on lead generation, with little return, highlights a systemic issue: UAGC, Cabrera said, has seemingly prioritized its push for new students over reforming Ashford’s remnants, which is still making headlines.

This month, the U.S. Department of Education announced it would cancel $4.5 billion in loans for 261,000 students who attended Ashford. And last year, the Education Department discharged $72 million in loan obligations for more than 2,300 former Ashford students.

In light of some of the continued problems, the University of Arizona should reassess its fundamentals of online education. It should prioritize meeting the core principles of academic quality and comprehensive student support over marketing its new venture. A stronger focus on student needs would drive more meaningful outcomes and enhance the university’s reputation in the online education space.

As Cabrera suggested, without a realignment of priorities, UAGC risks being an expensive endeavor with little impact. Its reliance on extensive marketing campaigns, like flashy Facebook ads, may eventually draw attention but will struggle to make up for the gaps in delivering long-term value to students.

[Editor's note: This article originally appeared on Republic Report.] 
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Thursday, January 16, 2025

Feds Cancel Debts for 261,000 Students of Disgraced School Now Run by U. of Arizona (David Halperin)

The Biden Department of Education announced today it has approved $4.5 billion in loan debt cancellation for 261,000 borrowers who attended for-profit Ashford University between March 2009 and April 2020. It also announced it would seek to ban Andrew Clark, the CEO of Ashford’s demised parent company, Zovio, from contracting with the federal government.

The announcement brings some measure of relief and justice to a huge number of former students of Ashford, which evolved from a single campus in Iowa that Zovio acquired in 2005 to a massive, high-priced, poor-quality, mostly-online school that got billions from taxpayers while leaving many worse off than when they enrolled. Ashford and Zovio were held liable and penalized $20 million for scamming students by a California court following a 2022 trial brought by that state’s attorney general. The verdict was upheld on appeal.

The former students were enrolled at Ashford by aggressive recruiters who told a lot of falsehoods but could say, truthfully, that the school was approved for federal student grants and loans by the Department of Education. The Department let these students down by keeping its good housekeeping seal on the school and thus keeping predatory Ashford eligible for taxpayer money. The Biden administration deserves credit for at last righting some of this wrong.

The California trial echoed numerous past reports of abuses by Zovio and Ashford. In fact, at a hearing focused on Ashford way back in 2011, then-Senator Tom Harkin (D-IA) declared Ashford “an absolute scam.” The California court found that Zovio and Ashford “created a high pressure culture in admissions that prioritized enrollment numbers over compliance.” The case included detailed testimony from Ashford employees about a deceptive operation engineered by senior Zovio executives — and about numerous lives ruined by a school that never earned the certifications that would allow graduates to even be eligible for the teaching, social work, and other jobs they sought.

Unfortunately for today’s students, Ashford continues to operate. It just changed its name to University of Arizona Global Campus (UAGC). In August 2020, Zovio sold Ashford to the University of Arizona, in a shady deal that allowed Zovio to hide the school under the apron of the powerful state university and shed the stigma that for-profit schools like Ashford had brought upon themselves — and yet still permit Zovio to make big money with a long term contract to run Ashford’s operations. After the California verdict, the University of Arizona forced Zovio out of the arrangement, but it hired most of Zovio’s employees and carried on with Zovio’s playbook. Mounting evidence of financial losses and continued predatory practices at the school likely played a role in the resignation of the school’s president last year.

The Department said that the California AG office had requested today’s loan discharges for Ashford students, based on evidence developed in its lawsuit “around widespread misrepresentations in nine separate areas, including students’ ability to obtain needed licensure, transfer credits, the cost and amount of financial aid, and the time it would take to earn a degree.” The Department said it conducted its own review of the evidence before acting.

Ashford has been sued or investigated by other federal and state agencies, including the U.S. Justice Department, Securities and Exchange Commission, and Consumer Financial Protection Bureau, and the attorneys general of Iowa, Massachusetts, New York, and North Carolina. A 2015 settlement with the CFPB forced Ashford to discharge $23.5 million in high-interest private loans and pay an $8 million civil penalty.

“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 today. “In reality, 90 percent 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.”

In 2023 the Department announced $72 million in debt cancellation for more than 2,300 Ashford borrowers who who applied for relief. But with today’s action, a much larger group of former Ashford students will get automatic relief, without having to apply and prove their cases. The Department says it will email former Ashford students informing them of the discharge.

When it announced that first $72 million in relief in 2023, the Department said it planned to come after the University of Arizona to recoup the losses, which federal permits. Today’s announcement creates an even greater risk of liability for the state school. U of A has denied it would be responsible, but its purchase agreement with Zovio suggests otherwise.

Separately, the Department issued a Notice of Proposed Government-Wide Debarment from Federal Procurement and Non-Procurement Transactions to Clark, the founder and former CEO of Zovio — aiming at a decision that would, among other things, prevent Clark from working as a principal or executive of any college getting federal aid.

In a statement today, the Department said it was acting against Clark “because Ashford violated federal regulations regarding making substantial misrepresentations. The evidence from the California litigation, and other sources, which the Department independently reviewed, is mountainous. The conduct of Ashford can be imputed to Mr. Clark because he participated in, knew, or had reason to know of Ashford’s misrepresentations. Mr. Clark not only supervised the unlawful conduct, he personally participated in it, driving some of the worst aspects of the boiler-room-style recruiting culture.”

The Department said it would refer the proposed debarment to its Office of Hearings and Appeals, with a recommendation that Clark be banned for “not less than three years .” (Three years?) Clark would have an opportunity to oppose the move.

I’m not sure Clark will bother, if indeed the debarment effort goes forward under the administration of former Trump University head Donald J. Trump. Clark’s last reported job on his LinkedIn page is as CEO of Zovio, which went out of business in 2022. Clark made tens or even hundreds of millions running Zovio, with annual compensation topping $20 million in at least one year.

Clark abruptly left the company in 2021. Others responsible for awful Zovio, which changed its name from Bridgepoint Education in 2019, include Ryan Craig, a private equity man who served on the board from 2003 to 2022, and Robert Eitel, who worked at the company from 2015 to 2017 and later was one of Betsy DeVos’s top aides in the first Trump Department of Education.

On Monday, the Department of Education granted similar automatic debt relief to 73,600 borrowers who attended schools of the disgraced chain Center for Excellence Higher Education. That operation’s CEO, Eric Juhlin, was similarly debarred by the Department in 2021.

Unfortunately for today’s students, who will now be at the mercy of the incoming Trump administration, in addition to Ashford-n0w-UAGC, there are still many awful, large for-profit chains still running, including Perdoceo and the University of Phoenix.

There’s one other thing the Biden administration could do to halt Ashford’s abuses before it turns over the keys to the Trump administration, which last time did almost everything possible to help predatory schools abuse students: It could act on the long-pending application by Arizona to approve the change of ownership of Ashford. It should reject the application. And the University of Arizona should shut down this scam school once and for all.

When I first got involved in the issue of for-profit colleges, back in 2010, I received a phone call from a man who said he was on a golf course in the San Diego area, where Zovio, then called Bridgepoint, was located. He said that a bunch of Bridgepoint executives were playing golf while loudly mocking Ashford students. He held up the phone so I could hear the laughter.

[Editor's note: This article originally appeared on Republic Report.]
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Saturday, November 9, 2019

Unnamed Ashford University Suitor Joining Purdue University Global in "Race to the Bottom"

Who would buy Ashford University, an online school that has lost more than 50 percent of its students and is downsizing key faculty and academic administrators?



[Video above:  Dr. Stephen Brewer has reported on the downsizing of key faculty at Ashford and the suspension of the University Senate.]

Having seen so many crazy deals in subprime higher ed, from the ECMC shotgun marriage with Corinthian Colleges to the Kaplan-Purdue deal, anything seems possible.

"A bunch of state schools want online at scale at any cost."...(It's a) race to the bottom. They see their students heading to ASU, SNHU, or the for-profits, and figure if they can get to scale, they will have the time and resources to fix the programs."--anonymous online college expert
Tyton Partners managing director Trace Urdan has suggested that UMass or George Mason might buy Ashford from its parent company, Zovio, but I'm not sure either of those schools would take the risk. In my estimation, Zovio does not have the assets, such as cash on hand, for a safe conversion over the long run. And this lack of assets would make the buyer school more responsible for finances during the conversion.

In my opinion, the most logical buyer would be a school that is WASC accredited (Ashford's current accreditor), large enough to handle the risk, and either does not have a strong online presence or wants to expand its presence. It would also need a president/CEO strong enough and a board and faculty compliant or weak enough to take the bait.

It's possible that a hedge fund or other for-profit firm could create a non-profit specifically for the new school.

In the meantime, Dr. Brewer, is asking for accountability and justice for Ashford University students and professors.  After working at the school for a decade, he said that the situation had changed for the worse, "restricting creativity, inhibiting instruction, and demoralizing otherwise talented, motivated, and forward-thinking educators."

For any state university willing to scale up their online presence, be warned. The Kaplan-Purdue University Global deal is not working out, and Purdue bought Purdue Global for $1 and $50 million in free advertising.

Other subprime deals, such as the EDMC-Dream Center deal (Art Institutes, Argosy, South University), Adtalem-Cogswell (DeVry University), and Apollo Group-Apollo Global Management (University of Phoenix) appear to have panned out poorly. But that may not stop someone in the big business of higher ed from taking the risk.

Related article: There’s a Right Way to Convert to a Nonprofit. Ashford University Isn’t Following It (Bob Shireman, The Century Foundation)

Related article: Restructuring and Layoffs at Ashford (Lindsay McKenzie, Inside Higher Education)

Related article: The Next Purdue-Kaplan Deal? (Lindsay McKenzie, Inside Higher Education)

Related article: Early Troubles In The Purdue, Kaplan Marriage (Derek Newton, Forbes)

Related article: For-Profit Bridgepoint Says Its Colleges Will Become Non-Profit, But It Won’t (David Halperin, Republic Report)

State Colleges Seduced By For-Profit, Online Education (David Halperin, Republic Report)



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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) 
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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.
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