Student loans: Former Ashford University students get $72M in debt discharged

Ronda Lee

The Department of Education is discharging $72 million in student loans for over 2,300 former students who attended Ashford University after the department found the online for-profit school made "substantial misrepresentations" that harmed borrowers.

The action applies to borrowers who enrolled in Ashford from March 1, 2009, through April 30, 2020, and filed for a borrower defense loan discharge, a legal ground borrowers can take against a school that engaged in misconduct related to the loan or the educational services it provided. These borrowers will receive emails from the Department of Education in September and no further action is needed.

Borrowers who attended Ashford but did not file a borrower's defense discharge will need to complete an application on the Federal Student Aid website.

This discharge comes after litigation on behalf of the California Department of Justice against Ashford and its parent company, Zovio Inc., resulted in a judgment against both entities in March 2022.

WASHINGTON, DC - MAY 24: Witness James Kvaal, Under Secretary of Education, U.S. Department of Education, listens to opening statements during a House Committee on Education and the Workforce | Subcommittee on Higher Education and Workforce Development Hearing: Breaking the System Part II: Examining the Implications of Bidens Student Loan Policies for Students and Taxpayers at the Rayburn House Office Building on May 24, 2023 in Washington, D.C. (Photo by Ricky Carioti/The Washington Post via Getty Images)
James Kvaal, under secretary of the Department of Education, listens to opening statements during a House Committee on Education and the Workforce on May 24 in Washington, D.C. (Photo by Ricky Carioti/The Washington Post via Getty Images) (The Washington Post via Getty Images)

"As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students," James Kvaal, the Department of Education under secretary, said in a statement. "Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing."

The Department of Education said Ashford told students that they could work as teachers, social workers, and nurses, but the institution never obtained state approval or accreditation for these programs. Ashford also misrepresented the cost of attendance and the amount of financial aid students would receive, saying the amount of loan debt would only be around $50 to $75 per month, the department said.

Ashford told students it had an accelerated degree path that was faster than a four-year school when its programs were structured for five years. It also exaggerated the transferability of credits to other institutions, according to the Department of Education.

Only 25% of borrowers graduated from Ashford within eight years of enrolling.

California Attorney General Rob Bonta fields questions during a news conference Monday, Aug. 28, 2023, in Los Angeles. California's attorney general sued a Southern California school district over its recently adopted policy that requires schools to notify parents if their children change their gender identification or pronouns. (AP Photo/Marcio Jose Sanchez)
California Attorney General Rob Bonta fields questions during a news conference Aug. 28 in Los Angeles. (AP Photo/Marcio Jose Sanchez) (ASSOCIATED PRESS)

"What Ashford University did to its students was unconscionable and illegal," California Attorney General Rob Bonta said in a press release. "That’s why the California Department of Justice took Ashford and its parent company to court. Ultimately, we prevailed, securing more than $22 million in penalties."

The University of Arizona acquired Ashford University in August 2020 and rebranded it the University of Arizona Global Campus (UAGC). Direct ownership was completed in June 2023. In acquiring Ashford, UAGC assumed any liability from Ashford.

The Department of Education is seeking to recoup costs for the borrower's defense discharge from the University of Arizona.

“The University of Arizona had no prior knowledge of today’s announcement by the Attorney General of California and U.S. Department of Education of $72 million in borrower defense to repayment discharges for more than 2,300 students who attended Ashford University (Ashford) and applied to the Department for relief,” a media spokesperson for the University of Arizona told Yahoo Finance. “The University of Arizona is reviewing the Department’s action and related information and will be assessing its options. These actions of Ashford and Zovio occurred well before The University of Arizona Global Campus (UAGC) acquired Ashford University.”

However, when a school acquires another school they agree to accept the liability from the school they’re acquiring, according to senior officials from the Department of Education.

"I want to thank the Biden-Harris administration for changing the lives of thousands of former Ashford students today," Bonta said. "They have lived a nightmare for too long. I encourage other individuals who took out federal student loans to attend Ashford and were subject to its deceptive or misleading tactics, to apply for relief from the US Department of Education as soon as possible."

Any student loan borrower who believes they were defrauded can apply for a borrower's defense discharge on the Federal Student Aid website.

Read more: Worried about when student loan repayments resume? These programs could help

Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda

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