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Online university fined $22M for misleading students

(WISH Photo, File)

SAN DIEGO (AP) — A California judge has ordered an online, for-profit university and its former parent company to pay $22 million in penalties, saying they mislead students about the costs of their education, among other things, the state’s attorney general announced Monday.

The San Diego Superior Court ruled in favor of the state of California in its 2017 lawsuit against Ashford University and and its then-parent company Zovio, Inc. The University of Arizona has since acquired the university and rebranded 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 searching for a job,” California Attorney General Rob Bonta said in a statement announcing the ruling. “While we can’t turn back the clock for these students, this decision should send a strong message: If you engage in deceptive practices in order to pad your bottom line, my office will hold you accountable.”

Bonta said he will fight for the students to be given relief from their federal student loans, and urged U.S. Secretary of Education Miguel Cardona to do that.

Zovio did not immediately respond to a request for comment.

San Diego Superior Court Judge Eddie C. Sturgeon wrote in his ruling issued Thursday that the university gave “students false or misleading information about career outcomes, cost and financial aid, pace of degree programs, and transfer credits, in order to entice them to enroll at Ashford.”

Sturgeon wrote that, during a bench trial held late last year, testimony from former Ashford employees revealed “a high pressure admissions department whose north star was enrollment numbers” and “a work environment permeated by fear, where closing the sale was prioritized above providing students with accurate information.”

The judge wrote that the school misrepresented how much financial aid they would receive, and downplayed the student loan debt they would incur and as such many dropped out and are saddled with debt.

In 2005, Zovio purchased the Franciscan University of the Prairies, a small religious school in Clinton, Iowa, so it would have students that attended an accredited university and be eligible for financial aid, according to court documents.

Zovio renamed the school Ashford University and turned it into an online university with more than 80,000 students at its peak. Zovio made hundreds of millions of dollars from Ashford, most of it 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 college students, with most in their mid-30s, largely low-income and roughly 50% were minorities. A bachelor’s degree cost between $40,000 and $60,000, and only about a quarter of students graduated with many defaulting on their loans, according to court documents.

In exchange for paying $54 million in a deal with the University of Arizona, Zovio will continue to receive almost 20% of the school’s tuition revenue for the next seven to 15 years, according to court documents.

The judge denied a request by the state to impose an injunction on the company, saying it did not believe there was enough evidence that the problems continue today to warrant that.

The company continues to provide many of the educational services it provided to Ashford.