Court orders UA Global Campus' management company to pay $22M for misleading students

A California court has ordered Ashford University, the former for-profit online college the University of Arizona has rebranded as UA Global Campus, and its former parent company Zovio to pay more than $22.37 million in penalties for misleading students about the cost and quality of an Ashford degree. Zovio still provides operation services to UA Global Campus.

The ruling, which California Attorney General Rob Bonta announced in a news release Monday afternoon, stems from a lawsuit the state filed against Ashford and Zovio (formerly known as Bridgepoint Education, Inc.) in 2017.

The suit alleged that the two entities violated the law by providing students false or misleading information about career outcomes, cost and financial aid, pace of degree programs and transfer credits, all in an effort to get them to spend their money at Ashford.

“Today’s decision is a win for the many Californians whose college dreams turned into nightmares after they enrolled in Ashford University,” Bonta said in the news release. “Ashford made false promises to students about the value of an Ashford degree, leaving students with mounting debt, broken promises, and searching for a job.”

Bonta continued on to say that "the court's findings provide a strong basis for the Department of Education to provide Ashford students with relief from their federal student loans," urging U.S. Secretary of Education Miguel Cardona "to act swiftly to provide this relief.”

As part of the asset purchase and sale agreement between Zovio, Ashford and the UA, Zovio has agreed to pay any liabilities — including this $22 million — arising from Ashford’s operations prior to December 2020.

"UAGC is not a party to the lawsuit and is not liable for the penalties awarded by the court, and the matter is subject to appeal," Linda Robertson, UA Global Campus' spokeswoman, told the Arizona Daily Star in response to the ruling. "There is new leadership in place at both UAGC and Zovio and doing right by our students is our number one priority."

As the for the UA's reaction to the ruling, university spokeswoman Pam Scott told the Star that the "UA is not liable or responsible for the actions of Ashford University or Zovio addressed by the court's decision in the lawsuit brought by the California Attorney General," and that "We are working with the US Department of Education, our accreditation bodies and our governing bodies to bring UAGC into the University of Arizona."

The UA acquired the assets of Ashford in 2020 while this litigation was still pending. Faculty members, education experts and two federal lawmakers panned the deal, in part because of how it could expose the UA to litigation, but it moved forward nonetheless.

Once that happened, the UA rebranded Ashford as the nonprofit UA Global Campus, though the U.S. Department of Education has not formally recognized UA Global Campus as a nonprofit. Then, in January of this year, as the department threatened to strip UA Global Campus of its ability to collect federal education dollars, UA President Robert Robbins announced the UA was fully absorbing UA Global Campus and its 28,000 online students into its operation.

The Arizona Board of Regents publicly endorsed the deal, which Robbins later told the UA Faculty Senate could mean "over $1 billion in liability" for the UA if it fell apart because the UA and the UA Foundation provide the financial backing for UA Global Campus' eligibility to collect Title IV funds, which includes Pell Grants and federal student loans.

According to court documents, the California court that heard arguments in the case against Ashford and Zovio late last year — which included allegations from a former UA Global Campus employee that these practices have not ceased since the UA came in the picture — concluded the defendants created a “high pressure culture in admissions that prioritized enrollment numbers over compliance.”

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“While defendants' executives testified that the admissions department did not have a high pressure '"boiler room' environment,” San Diego Superior Court Judge Eddie C. Sturgeon's ruling reads, “a paper trail shows that company executives were well aware of that department's fear-based culture.”

Pat Ogden, former vice president of regulatory affairs at Ashford who worked at UAGC until last spring, characterized UA Global Campus as “the same institution under a different name,” according to a court transcript. “Zovio is providing the same enrollment and marketing services for the newly named University of Arizona Global Campus,” Ogden said. “And Zovio’s historically ineffectual compliance department will continue to exercise oversight over the Zovio admissions counselors enrolling students in UAGC.”

Ashford, like many for-profit colleges, has historically enrolled more marginalized students than many traditional public, four-year universities like the UA. According to the Department of Education, 31% of Ashford’s students  identify as Black, 16% identify as Hispanic and 68% received a federal Pell Grant, which is intended for low-income students.

Since announcing the UA’s plan to absorb UA Global Campus, Robbins has acknowledged Ashford and Zovio’s checkered past and the wrongs inflicted on Ashford students. At the same time, however, he’s assured critics, including a vocal contingent of UA faculty members, things are changing now that UA is at the helm.

To that point, Sturgeon seemed to agree. The judge declined to issue an injunction against Zovio in this month's ruling after the bench trial, which included Ogden's account, concluded in December 2021. “The People have not presented sufficient evidence of ongoing misconduct to support its demand for an injunction,” the ruling said. “The court does not find the evidence postdating 2017 to be such that an injunction is needed."

Robbins and other top UA administrators have attended two meetings of the UA Faculty Senate over the past month to discuss faculty concerns as the integration of UA Global Campus into the UA moves forward.

In one meeting, Robbins suggested that although UA Global Campus is less than two years into a 15-year contract with Zovio, which serves as the school's online program management provider and receives about 20% of tuition revenue, it may not have to stay that way. Although UAGC would have to agree to terminate its contract with Zovio, “I think we would all agree that would be the best course of action,” he said.

In those meetings, UA administrators said there’s proof that Zovio’s practices have changed, pointing to a “secret shopper” investigation into Zovio as it has served UA Global Campus.

Faculty have not seen it, sources told the Star.

When the Star submitted a public records request for it, the UA said it was under UA Global Campus’ purview. The Star asked UA Global Campus for it, but the online university did not produce it, claiming “it is not subject to public records requests as a private entity, and the secret shopper reports are subject to attorney-client privilege regardless.”

In light of this month’s ruling, some faculty members are left further unconvinced that Zovio, which now owes $22 million in restitution, has changed its ways now that it's servicing the UA Global Campus brand.

“Given what the court has said, it’s time for the Board of Regents and the president to bail out and hopefully without golden parachutes,” UA Faculty Senator Ted Downing, who is also a former Arizona state legislator, told the Star on Monday. “If this had appeared when I was in (the Legislature) there would have been hearings immediately to explain how the hell we got into this.”