Editor's note: This story focuses specifically on a settlement reached between the State of Iowa and the parent company of Ashford University. Each state’s attorney general has a website which includes an avenue for initiating an inquiry or a formal complaint.
Ashford University denies wrongdoing but will pay $7.25 million to settle claims that recruiters lied to convince prospective students to enroll in online classes.
Iowa Attorney General Tom Miller alleged Ashford University and its parent company, Bridgepoint Education Inc., violated Iowa's Consumer Fraud Act by withholding some information, using high-pressure sales tactics, charging huge non-refundable fees and making misleading statements to convince prospective students to enroll in online classes.
Bridgepoint Education reported nearly 96% of its 63,624 students were enrolled through Ashford University online. Nearly 800 of those students were enrolled at Ashford's Clinton campus.
“Our investigation found what we allege was troubling conduct by Ashford recruiters, including misleading prospective students to encourage them to sign on the dotted line,” Miller said. “Unfortunately for many Ashford students, they didn’t get the degree they hoped for or the job they were led to believe they’d get after graduating. What they did end up with was a crushing amount of student loan debt.”
Miller claimed some prospective students were told their online degree from Ashford would qualify them to become classroom teachers when they would actually need to meet additional requirements to qualify for teaching positions.
Some students were charged upfront technology fees between $900 and $1,290 that were not refunded even if the student dropped out shortly after payment was made. The school website says they currently charge a $50-per-course technology fee.
Miller says the $7.25 million "Assurance of Voluntary Compliance" settlement will help reimburse an undetermined number of former and current Ashford online students from Iowa.
Current and former students are not required to have a complaint on file to be eligible for reimbursement. The state's Consumer Protection Division will contact Iowa students who are eligible for compensation from the fund. The exact level of reimbursement for specific students had not yet been announced.
In addition to the reimbursement fund, Ashford University and Bridgepoint Education agreed to standards that prohibit using "unconscionable or coercive tactics" to persuade students to enroll or remain enrolled; saying or implying that any online degree from Ashford will lead to licensure or certification without additional steps unless it is true; making false, deceptive or misleading statements, omitting material facts and engaging in unfair practices.
Ashford must also require incoming students with no previous college credits to participate in a free two-week online orientation program, and to allow students to withdraw from their first course within the first three weeks at no cost.
Miller said the settlement was the culmination of three years of investigation into the school's recruiting practices for online students.
Bridgepoint Education posted a loss of $4.4 million for first quarter, and the company expected to miss its quarterly filing deadline with the Securities and Exchange Commission.