Online university fined $22 million for misleading students
A California judge has ordered a for-profit online university and its former parent company to pay $22 million in fines, saying they were misleading students about the costs of their education, among other things, a the state attorney general announced on Monday.
The San Diego Superior Court ruled in favor of the State of California in its 2017 lawsuit against Ashford University and its then-parent company, Zovio, Inc. The University of Arizona has since acquired the university and renamed the online school, the University of Arizona. Global Campus. It is an independent university that is operated in affiliation with the University of Arizona.
“Ashford made false promises to students about the value of an Ashford degree, leaving students with mounting debt, broken promises and looking for jobs,” the California attorney general said. Rob Bonta, in a statement announcing the decision. “While we can’t undo this for these students, this decision should send a strong message that if you engage in deceptive practices in order to boost your grades, my office will hold you accountable.”
Bonta said students should get relief from their federal student loans and urged U.S. Education Secretary Miguel Cardona to act quickly to do so.
Zovio did not immediately respond to a request for comment.
San Diego Superior Court Judge Eddie C. Sturgeon wrote in his ruling on Thursday that the university gave “students false or misleading information about career outcomes, costs and financial aid, the pace of degree programs and transfer credits, to entice them to enroll at Ashford.
Sturgeon wrote that in a bench trial held late last year, testimony from former Ashford employees revealed “a high-pressure admissions department whose north star was the number registrations” and “a work environment steeped in fear, where closing the sale was prioritized above providing students with accurate information.
The judge wrote that the school misrepresented the amount of financial aid they would receive and minimized the student loan debt they would incur, and as a result many dropped out and are in debt.
In 2005, Zovio purchased Franciscan University on the Prairies, a small religious school in Clinton, Iowa, so that it would have students attending an accredited college and be eligible for financial aid, according to court documents.
Zovio renamed the school Ashford University and turned it into an online university with over 80,000 students at its peak. Zovio earned hundreds of millions of dollars at Ashford, most from taxpayer-funded sources like Title IV loans, income-based grants and GI Bill funds, according to court documents.
The student body was older than traditional university students, most in their mid-30s, largely low-income, and about 50% were from minorities. A bachelor’s degree costs between $40,000 and $60,000, and only about a quarter of students have graduated and many have defaulted on their loans, according to court documents.
In exchange for paying $54 million under a deal with the University of Arizona, Zovio will continue to receive nearly 20% of the school’s tuition revenue for the next seven to 15 years, according to court documents.
The judge denied a state request to impose an injunction on the company, saying he did not believe there was enough evidence that the problems persist today to warrant it.
The company continues to provide many of the educational services it provided to Ashford.