California Attorney General Xavier Becerra on Wednesday filed a lawsuit against Ashford University, a for-profit chain, and parent company Bridgepoint Education, accusing it of engaging in unlawful marketing, sales and debt collection practices.
To enroll prospective students, Ashford employees allegedly misled them about the cost of attending, their eligibility for federal loans and grants and the timing of financial aid and the use of that funding, according to the complaint. Prosecutors say the university pressured its admissions counselors to hit high enrollment goals under the threat of dismissal and fostered a sales culture that resulted in misconduct.
Ashford administrators were allegedly aware of counselors making false promises to prospective students, but failed to address the systemic problem or discipline offenders. Its own internal reports identified hundreds of misrepresentations a month based on audits of fewer than 5 percent of each counselor’s calls. One admissions counselor was flagged for 25 violations over eight months, including repeatedly misleading people about financial aid and costs of attending, but received only a written warning, according to the complaint.
Prosecutors say this behavior resulted in students being saddled with tuition expenses and other debts they could not afford — costs they would not have agreed to had they known the truth. When students fell behind on those debts, Ashford used abusive tactics to collect, according to the complaint. Ashford allegedly charged or threatened to charge illegal debt collection fees and imposed unlawful fees for bounced checks.
Anna Davison, vice president for investor relations at Bridgepoint, said the company will vigorously defend itself against the allegations brought by the attorney general.
“We look forward to sharing the facts and success stories of our students and our school, because we’re proud of our work and confident that we’ll be fully vindicated,” Davison said, in an email. “Bridgepoint’s institutions serve as a model for how online education can better the lives of people who did not, or who were unable to, pursue more traditional avenues to degrees.”
Ashford educates more than 41,300 students through its online suite of programs, according to fall enrollment data from the U.S. Department of Education. The California attorney general is seeking civil penalties.
Wednesday’s lawsuit is the latest blow for Ashford. Earlier this month, the university temporarily suspended new enrollment of veterans using GI Bill benefits after the U.S. Department of Veterans Affairs threatened to pull its eligibility to receive those education funds. The federal agency is questioning the state approvals the university needs to remain eligible in the GI program.
Ashford is also facing investigations by attorneys general in New York and North Carolina. A year ago, Bridgepoint agreed to pay more than $24 million to refund and discharge debt that students accumulated through an in-house loan program. In that settlement, the Consumer Financial Protection Bureau accused the company of misrepresenting the total cost of the loans by telling prospective borrowers they could pay them off by sending as little as $25 a month.
A month before that settlement, the Department of Education ordered Bridgepoint to pay a fine for failing to verify enrollment before disbursing federal grants and loans and handing students more financial aid dollars than the law allows. Just weeks earlier, the Justice Department launched an investigation into whether the company is violating a law that prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding.
For years, publicly traded for-profit colleges have run afoul of state and federal regulators over allegations of misleading consumers about their programs, aggressive marketing tactics and steering students into high-cost loans. Though the Trump administration has eased regulations aimed at reining in bad behavior in the for-profit college sector, the industry continues to struggle with lackluster student enrollment.