Over 2,300 student borrowers who were ripped off by their online for-profit college will have their loans forgiven, the Biden administration announced Wednesday. The relief will go to students of Ashford University in California, and totals $72 million.
“My administration won’t stand for colleges taking advantage of hardworking students and borrowers,” said President Joe Biden in a statement. “As long as I am president, we will never stop fighting to deliver relief to borrowers who need it – like those who attended Ashford University.”
The Department of Education (ED) found that Ashford misled borrowers in a variety of ways between 2009 and 2020. Students were told that they could become teachers, social workers, and nurses, but Ashford’s programs lacked state approval and accreditation for these jobs. Recruiters lied about Ashford’s cost of attendance and financial aid offerings, as well as how long the programs took to complete. They also exaggerated the number of previously earned credits that Ashford would accept and promised that Ashford credits would always transfer to other institutions, which was not true.
The result was an unexpected and heavy financial burden for students, with many unable to finish their degree or find employment. Only one in four students graduated from Ashford within eight years. And three quarters of Ashford’s bachelor’s programs were found to result in negative value for students, making them, as ED put it in a press release, “essentially worthless.” ED’s decision follows a lawsuit from the state of California that resulted in a $22 million judgement against Zovio, Ashford’s then-owner.
The announcement of the discharge comes as part of the Biden administration’s efforts to offer debt relief to narrower groups of student borrowers after its plan for more widespread forgiveness was dashed at the Supreme Court in June. The relief comes via the borrower defense to repayment rules, which allow ED to forgive the loans of borrowers whose schools misled them or closed suddenly. So far, the Biden administration has offered $14.8 billion dollars in relief to 1.1 million borrowers in this way. The administration has also issued regulations to make these sorts of claims easier for students, but the changes are currently tied up in court.
The government also announced that it would seek to recoup the cost of the forgiveness from Ashford’s current owner, the University of Arizona (UA). UA bought Ashford from Zovio in 2020 for $1 to rebrand it as the non-profit University of Arizona Global Campus. It was not clear how much the government could manage to claw back. ED is currently being sued by DeVry University, a for-profit institution from which the department is trying to recoup borrower defense claims.
In the meanwhile, borrowers who have already filed claims against Ashford can expect to receive emails from ED in September. Those who haven’t yet filed claims are encouraged to do so at studentaid.gov/borrower-defense.