(CN) — More than 2,000 students of a San Diego-based online school, which broke the law by giving its pupils false information, will have their loans set aside, state and federal officials said Wednesday.
The Biden administration announced the approval of $72 million in borrower defense repayment discharges for the students of Ashford University. Those announcement follows a March win in San Diego Superior Court for the state of California in its lawsuit against Ashford and parent company Zovio, Inc., formerly known as Bridgeport Education.
A court found that between March 1, 2009, and April 30, 2020, Ashford and Zovio gave students false or misleading information about cost and financial aid, the pace of degree programs, career outcomes, and transfer credit to induce them to enroll.
The court ordered Ashford and Zovio to pay over $22.3 million in penalties, but they appealed the judgment.
The court found that university recruiters told people they could become teachers, social workers, drug and alcohol counselors and nurses. However, Ashford never received the required state approval or accreditation needed for its students to attain those professions.
“What Ashford University did to students was unconscionable and illegal,” California Attorney General Rob Bonta said in a Wednesday press conference.
Only 25% of students graduated from Ashford within eight years of enrolling. Borrowers said they couldn’t find jobs, couldn’t finish their programs and had unexpected financial issues, according to a press release.
The students who qualified for a borrower defense discharge will receive an email next month stating their application was approved. Any remaining loan balances on federal loans will be zeroed out and credit tradelines deleted. Refunds will be issued on payments made on those federal student loans.
Those with federal loans who attended Ashford between the 2009 and 2020 dates and were harmed by the misinformation, but haven’t applied for borrower defense, can visit studentaid.gov/borrower-defense and file a claim.
“The department will seek to recoup the cost of these discharges,” U.S. Under Secretary of Education James Kvaal said.
That includes seeking money from the current owner of Ashford University — the University of Arizona, which in 2020 announced a plan for its foundation to buy Ashford and change it to the University of Arizona Global Campus. The University of Arizona gained direct ownership of that institution in June 2023, the release stated.
The California suit wasn’t the first time Ashford and Bridgeport Education have experienced legal issues.
In 2014, Ashford and Bridgeport agreed to settle consumer fraud claims in Iowa for $7.25 million. The Iowa attorney general said at the time that Ashford “used unconscionable sales practices” and that telemarketers lied to people, inducing them to enroll.
Ashford admitted to no wrongdoing in that settlement.
In total, federal officials say the government has provided over $116 billion in debt relief to more than 3.4 million borrowers. That includes $14.7 billion for 1.1 million people whose colleges took advantage of them or suddenly closed.
President Joe Biden said in a statement he has promised to fight for hardworking families, correcting issues in the student loan system that have failed borrowers for too long.
“Today, I’m proud that my Administration is taking another step forward in that effort and approved $72 million in debt relief for over 2,300 borrowers who were cheated by Ashford University,” Biden said. “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.”
Biden also said he intends to continue pursuing a different path to deliver on student debt relief, after his loss this summer in the U.S. Supreme Court. The high court ruled that the Republican-controlled states that brought the suit have legal standing to challenge the president’s loan forgiveness program
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