In a significant move aimed at rectifying injustices faced by students, the Biden administration has announced the cancellation of $72 million in student loans for 2,300 borrowers who were victims of deceptive practices by Ashford University, a former for-profit college that underwent a change of ownership in 2020 when it was acquired by the University of Arizona. This decision, announced by the Education Department on Wednesday, reflects a commitment to holding institutions accountable for their actions and offering relief to affected individuals.
The Education Department’s action underscores its determination to recoup the funds from the University of Arizona, which acquired Ashford University. While the University of Arizona has yet to respond with an official comment, this development is likely to have a significant impact on the institution’s financial obligations.
Prior to its acquisition, Ashford University operated as an online for-profit college under the ownership of Zovio, based in San Diego. This institution enrolled a substantial number of students, surpassing 100,000. However, revelations emerged in a California court in 2022 that Ashford had consistently misled students, employing deceptive tactics to entice them to enroll. These tactics included false information about accreditation, costs, and graduation timelines. The court’s verdict confirmed that students were systematically misled and defrauded.
President Joe Biden himself expressed his stance on the matter, highlighting that his administration will not tolerate educational institutions taking advantage of hardworking students. In a statement, Biden emphasized the magnitude of the issue, stating, “These borrowers were lied to about the cost of attending Ashford, were misled about how long it would take to get a degree, and were deceived about the transferability of Ashford credits. They deserve better.”
This course of action will automatically result in the discharge of loans for the 2,300 borrowers who were impacted by Ashford’s deceptive practices. These borrowers attended Ashford University from March 2009 through April 2020 and had submitted applications for loan cancellation through the Education Department’s borrower defense program. Consequently, their loan balances will be wiped clean, and they will be reimbursed for payments made towards their federal loans.
California Attorney General Rob Bonta, a staunch advocate for justice in this matter, urged other former Ashford students who were similarly deceived to seek relief through the proper channels. Bonta condemned Ashford’s actions as both unconscionable and illegal and expressed satisfaction that legal action was taken against the institution.
Under Ashford’s previous ownership, recruiters made promises to students that later proved false. They touted potential career paths in professions like teaching, social work, nursing, and counseling, but the institution had not obtained accreditation for these fields. Recruiters also inaccurately assured prospective students that they would face no out-of-pocket costs and misrepresented the length of the degree programs. The lawsuit further revealed that Ashford’s actual graduation rate was strikingly low, with only 25 percent of students graduating within an eight-year timeframe.
The legal proceedings culminated in a victory for California in 2022, with the court imposing a substantial civil penalty of $22.3 million against Ashford. While this penalty is currently being appealed, it serves as a testament to the gravity of the institution’s transgressions.
It’s noteworthy that the University of Arizona’s acquisition of Ashford University in 2020 led to its transformation into an online branch, rebranded as the University of Arizona Global Campus. This acquisition was part of a broader trend in which nonprofit universities acquired for-profit colleges, as seen in Purdue University’s acquisition of Kaplan University and the University of Idaho’s acquisition of the University of Phoenix.
The Biden administration’s action is not confined solely to this case. Independently of this student loan cancellation, the administration is also working towards proposing a broader plan for student debt relief. Following the Supreme Court’s rejection of the initial proposal in June, the Education Department is actively engaging in a rulemaking process set to begin in October. This process aims to culminate in the issuance of a final rule on student loan cancellation in the coming year.
In sum, the cancellation of student loans for borrowers affected by Ashford University’s deceitful practices is emblematic of the Biden administration’s commitment to fostering equity and accountability in the realm of education. This action sends a clear message that deceptive practices will not be tolerated, and that steps will be taken to rectify the harm caused to students who placed their trust in institutions for their educational aspirations.