On Wednesday, the Biden administration made headlines by announcing a decision to wipe out $4.5 billion in student loans for 261,000 borrowers who attended Ashford University, which is no longer operational.
The debt forgiveness applies to individuals who were enrolled at this primarily online, for-profit institution from March 1, 2009, to April 30, 2020. The California Department of Justice, after successful litigation against Ashford University and its parent company, Zovio, Inc., requested this debt relief for federal student loan borrowers based on gathered evidence.
California accused the university of misleading students by making false promises and giving out incorrect information. This included misinformation about the costs, degree value, and job prospects, all aimed at boosting enrollment numbers.
The legal battle culminated in 2022 with a court imposing a fine exceeding $20 million against Zovio and Ashford University, as highlighted by the Education Department.
Further details reveal that recruiters at Ashford University made promises that didn’t hold water, assuring students they could pursue careers as teachers, social workers, nurses, or counselors. The stark reality was that the university lacked the necessary state approvals or accreditation required for such professional paths. This oversight meant students spent years and took on substantial debt for credentials that were essentially ineffective, as noted in an Education Department press release.
Moreover, Ashford’s staff misrepresented details concerning tuition costs, the total debt students could expect, and the time needed to finish certain degree programs.
In related personal finance news, topics such as the IRS’s free Direct File program, debt forgiveness initiatives for 150,000 other borrowers, and savings from participating in ‘dry January’ have emerged.
James Kvaal, the U.S. Under Secretary of Education, commented on how numerous federal and state investigations have showcased Ashford University’s deceptive recruiting strategies. Alarmingly, 90% of Ashford students did not graduate, and for those who did, the outcome was often high debt burdens coupled with low incomes.
After the University of Arizona acquired Ashford in 2020, Zovio chose to cease operations by late 2022, as reported by HigherEd Dive. Mieczyslaw J. “Mitch” Zak, a spokesman from the University of Arizona, clarified that the university was not involved in the lawsuit that the California Department of Justice filed against Ashford and Zovio. He stressed that there was no connection with these entities during the lawsuit’s relevant period.
Since President Biden assumed office, the administration has approved debt forgiveness totaling $183.6 billion for over 5 million federal student loan borrowers.
