Media Advisory & Backgrounder: Higher Ed & Veterans Story
Contact: Carrie Wofford, President, [email protected]
Organization that Brought Whistleblowers and Defrauded Veterans to Fraud Case, Veterans Education Success, Applauds Court Ruling For-Profit, Ashford University, Committed Extensive Illegal Conduct
March 7, 2022 —The San Diego Superior Court ruled today, in a win for the California Attorney General’s Office, that for-profit Ashford University, violated the law by giving students false or misleading information in order to entice them to enroll. The Court ordered Ashford to pay a fine of more than $22.37 million.
Nonprofit veterans advocacy organization, Veterans Education Success, provided the California Attorney General with several whistleblowers and more than 100 student veterans who brought forward evidence of fraud to the organization.
In addition to this statement, VES can provide additional comment and answer questions and can connect reporters to students veterans that attended Ashford University.
“This verdict makes clear that Ashford University committed widespread fraud by enticing veterans and other students to enroll in expensive programs that turned out to be worthless,” said Jennifer Esparza, Legal Affairs Director for Veterans Education Success. “We applaud the California Attorney General’s Office for their fight for justice for students and veterans. Now it is time for the federal government to cut off federal funds to this school and help students who were defrauded, including discharging student loans. The millions of dollars Ashford will pay in fines will not restore the GI Bill benefits that Ashford essentially stole from student veterans.”
Esparza, a Marine Corps veteran, said “I, like thousands of others, attended Ashford University while on active duty using Tuition Assistance, and quickly realized it was low quality and did not provide the education the recruiter promised. I am so thrilled to see this court decision.”
Just last month, Ashford veterans testified to the Education Department:
- “The bottom line is that Ashford made promises to get me to enroll at the school that did not turn out to be true. I would never have gone to Ashford if I had known that my GI Bill was not going to cover all my tuition, and that Ashford is unfriendly and unhelpful to military veterans.” Jenica King’s testimony here.
- “As it turned out, my GI Bill only covered two classes. Contrary to their initial promise, the school has refused to provide the additional funding, and I had to take out student loans to continue my education.” Jonelle Daugherty’s testimony here.
After an 18-day trial with 23 live witnesses, another 17 witnesses who presented via deposition, and more than 1,514 exhibits, the San Diego Superior Court issued a 47-page decision.
The Court identified four main areas of illegal conduct committed by the school against students all over the country:
- Ashford misled students about their ability to obtain careers that require licensure, such as teaching, nursing, and social work, with an Ashford degree. For instance, Ashford falsely promised students they could use their degree to become teachers, but in fact, Ashford degrees do not qualify its graduates for most teaching positions, which require teacher licensure.
- Ashford lied to students about the cost of its degrees and the true amount of financial aid available to pay for the tuition, and it downplayed the amount of debt students would be taking out.
- Ashford deceived students about the true pace and time commitment of Ashford’s degrees compared to other colleges. Ashford’s admissions’ staff routinely described the programs as “accelerated,” which the school admitted was inaccurate.
- Ashford misrepresented the ability to transfer credits into the school and out of Ashford to another school. For example, admissions counselors routinely made inaccurate promises that students’ prior credits or life experience would transfer before the student received an accurate evaluation from the school.
In addition to making clear the widespread and longstanding fraud by the school, this judgment should clear the way for the federal government to:
- Discharge the federal loans for students who were defrauded by Ashford during the time of the illegal conduct.
- Cut off GI Bill to the school under 38 USC 3696 which forbids GI Bill to schools that engage in deceptive and misleading recruiting, as well as Defense Department tuition assistance under Defense Department rules that forbid tuition assistance to schools that engage in substantial misrepresentations.
Despite Ashford’s well-documented questionable conduct (which the court has now deemed was actually illegal) the University of Arizona bought Ashford in 2020 from its for-profit corporate parent Zovio, Inc., with the agreement that Zovio would continue to perform the admissions, recruiting, and financial aid for the school and be paid a percentage of the revenue. We urge the University of Arizona to reconsider its financial arrangement with this fraudulent company.
SOURCES FOR COMMENT & BACKGROUND
- One military recruiter whistleblower went on NBC Nightly News to describe the lies told to veterans.
- The AG’s complaint, filed in 2017, alleges that Ashford “employed an army of sales representatives who worked….under intense pressure to meet unrealistic quotas, …these employees frequently enticed prospective students to enroll using false promises and faulty information.” The complaint also states that Ashford’s own internal audits show that its admissions counselors engaged in tens of thousands of misrepresentations each year.
- Several whistleblowers who served as Ashford recruiters, corporate directors, and professors have publicly shared concerns that echo the concerns of government agencies and former students about enrollment practices and the quality of Ashford’s education. Ashford has faced a long history of federal and state regulatory and law enforcement actions, which are described below.
- As the law enforcement action by the California Attorney General was pending, Ashford’s corporate owner, Zovio, entered into a deal to transfer Ashford to the University of Arizona and rebrand it as the University of Arizona Global Campus. However, Zovio will maintain control over the school’s recruiting, financial aid, and nearly every other element of the school, and Zovio will be paid a percentage of the school’s annual tuition revenue. This arrangement ensures Zovio is financially incentivized to continue the same predatory recruitment conduct, despite its “sale” of Ashford to the University of Arizona.
Below is background information for reporters on:
- Zovio/Ashford’s financial arrangement with the University of Arizona
- The history of law enforcement and government actions against Ashford
- Facts about Ashford’s abuses of veterans, and
- Government data on Ashford’s student outcome metrics.
Ashford University/University of Arizona Global Campus Recent Actions and Concerns
In August 2020, Zovio announced that the University of Arizona would acquire Ashford for $1 and rebrand it as the University of Arizona Global Campus (UAGC). In exchange, Zovio obtained a long-term agreement to operate UAGC’s recruiting, financial aid, counseling, institutional support, information technology, and academic support services and be paid all direct costs of providing those services, plus 19.5% of UAGC’s tuition revenue. UAGC will operate independently of the University of Arizona, have its own board of directors, and retain Ashford’s faculty, staff, and academic programs — essentially maintaining Ashford as it is now, but under a new name.
Zovio’s control of UAGC and the California Attorney General’s lawsuit for Zovio’s past actions are not explained in UAGC’s marketing materials. Because of that, students may easily be misled into believing they are attending the University of Arizona, or at least an equivalent public school under the control of University of Arizona, while they are actually attending Ashford University under a new name.
These are not theoretical concerns. For instance, on July 7, 2020, the Department of Education instructed Ashford to “refrain from identifying itself as a ‘nonprofit institution’ in any advertising, publications, or other notifications unless and until the Department approves the request to convert to nonprofit status.” For at least two months, however, Zovio continued to claim that UAGC was a non-profit institution in its marketing materials, which was clearly an intent to separate it from the self-created stigma of Ashford University and other predatory for-profit colleges.
The problems with the University of Arizona’s deal with Zovio do not stop there. On July 30, 2021, UAGC’s accreditor, WASC Senior College and University Commission sent a letter to the school, noting “strong concerns that the targets set for academic improvement are seriously inadequate to reach levels of student outcomes that should be expected at an accredited institution.” It also requested information about the school’s relationship with Zovio.
Government and Private Actions
- In February 2020, the Department of Veterans Affairs disapproved 20 Ashford University programs from receiving GI Bill benefits. Sixteen of those programs did not leave the students eligible to earn the necessary license in the promised field of occupation. Nineteen of the programs were not “consistent in quality, content and length with similar courses in the California public university systems, with recognized accepted standards.”
- In July 2019, Ashford’s accreditor issued a Formal Notice of Concern because of “longstanding concerns regarding Ashford University’s student persistence and completion rates and performance on other student metrics.”
- In 2017, the California Attorney General filed a lawsuit alleging that Ashford’s sales representatives use intense pressure and false promises to enroll students and that Ashford’s own internal audits show that its admissions counselors engage in tens of thousands of misrepresentations each year.
- In 2017, the Department of Education found that Ashford owed $300,000 for incorrect refund calculations and refunds that were not made or were made late.
- In 2016, the Consumer Financial Protection Bureau settled with Ashford and its owner for $31.5 million after finding that they deceived students into taking out private loans that cost more than advertised.
- In 2016, the Department of Justice investigated Ashford and its owner over allegations that they misstated Title IV refund revenue or overstated revenue associated with private secondary loan programs.
- In 2015, the Department of Education investigated representations made to potential and enrolled students to determine if Ashford was in compliance with the prohibition on substantial misrepresentations.
- Also in 2015, the Department of Education informed Ashford that it had not fully responded to disclosures required under gainful employment.
- In 2015, Ashford entered into a confidential settlement with a former student who had sued the school for inducing students to enroll by systematically concealing material information and making purposeful misrepresentations, pressuring students to enroll with illegal recruiting tactics, and misleading students regarding financial aid.
- In 2014, the Iowa Attorney General settled with Ashford and its owner for $7.25 million over violations of Iowa’s consumer protection laws, including “unconscionable sales practices,” nondisclosures, and misrepresentations.
- In 2014, the Securities and Exchange Commission and Massachusetts, North Carolina, and New York Attorneys General all investigated Ashford and its owner.
- In 2012, a report on for-profit colleges by the Senate Committee on Health, Education, Labor, and Pensions found that Ashford was engaging in aggressive recruiting practices by encouraging its recruiters to overcome objections and to create urgency. One recruiter was fired for not signing up enough students, even though her students had a 100% retention rate.
Allegations about Mistreatment of Veterans
- As of February 2020, Veterans Education Success had received 109 complaints from Ashford students.
- 28% of complaints raised concerns about the school’s accreditation and transferability of credits.
- Nearly 17% raised the quality of the school’s education.
- 17% had student loans they had not agreed to or had not expected to be required to take out.
- Over 15% complained about recruiting and marketing.
- Complaints about program costs were raised by 13% of the students.
- 13% complained about post-graduation job opportunities.
- 12% complained about a lack of student support
- Over 6% of the complaints raised the school’s failure to release transcripts.
- 3% complained the school was changing the degree plan or requirements.
- Since February 2020, Veterans Education Success has received approximately 20 additional complaints from Ashford students.
- 33 Ashford students logged complaints with VA against Ashford in the past 24 months. 55% of the complaints were about financial issues like tuition and fee charges, 24% were about the quality of the education, and another 24% were about student loans.
- In October 2020, several organizations asked the Department of Education to investigate whether the University of Arizona was in violation of the ban on incentive compensation and whether the deal with Zovio would create further violations.
- In March 2020, Ashford’s owner, Zovio, announced that it planned to hire 200 additional enrollment advisors, indicating an intent to continue its high-pressure enrollment tactics that students and whistleblowers have complained about.
- In 2017 and 2020, Ashford repeatedly sent misleading communications to its student body, misrepresenting the school’s status with respect to GI Bill eligibility and encouraging students to mistrust information provided by the Department of Veterans Affairs.
- In 2016-18, Ashford attempted to mislead the Department of Veterans Affairs and State Approving Agencies in its attempt to retain GI Bill eligibility.
- Only 15.6% of the GI Bill tuition funds received by Ashford in 2017 were spent on instruction and only 20% of all tuition revenue was spent on instruction during fiscal year 2020.
- In its 2021 3Q earnings call on October 27, 2021, Zovio’s executives told investors that it would be increasing its efforts to recruit military veterans at UAGC.
- According to the Department of Education’s College Scorecard data (referenced November 2, 2021):
- Only 24% of full-time, first-time undergraduates return to Ashford University after their first year at the school (compared to 82% at the University of Arizona);
- Only 22% of students graduate within eight years of entering Ashford (counting full-time, part-time, and transfer students), compared to 63% at Arizona. Another 47% of students withdraw from Ashford and 31% transfer elsewhere within eight years, compared to 9% withdrawing and 28% transferring from Arizona.
- After graduation, Ashford students have, on average, over $10,000 more in student loan debt than University of Arizona students. Ashford students have a median total debt of $26,563 to $43,929, while students at Arizona have a median total debt of $14,838 to $31,000.
- Six years after entry, Ashford students have mean earnings of $34,000, while Arizona students have mean earnings of $41,800. Only 51% of Ashford students earn at least $28,000 six years after entry, compared to 68% of Arizona students (as of October 6, 2020).
- Ashford students default in paying back their student loans at higher rates than University of Arizona students do. 15% of Ashford students defaulted after three years, while only 6% Arizona students defaulted in that time. Similarly, 26% of a separate cohort of Ashford students defaulted after five years, while only 6% of a separate cohort of Arizona students defaulted in that time (as of October 6, 2020).