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May 16, 2014

Ashford University and Parent Company Bridgepoint Education Agree to $7.25 Million Payment and Major Changes after Miller Alleges Consumer Fraud

Many online Iowa students from Iowa to receive some reimbursement; agreement requires Ashford to change practices nationwide and submit to independent oversight

(DES MOINES, Iowa) Ashford University and San Diego-based parent company Bridgepoint Education Inc. have agreed to a $7.25 million dollar payment and are required to change certain recruitment and enrollment practices after Attorney General Tom Miller alleged the for-profit online school violated Iowa’s Consumer Fraud Act.

The settlement caps a three-year investigation into complaints filed by current and former Ashford students that the online school’s conduct resulted in students not completing their educational programs, not obtaining professional licenses, and being saddled with substantial student loan debt.

“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 Alleges Violations of Consumer Fraud Act
Miller alleged that Ashford used “unconscionable sales practices through which Ashford telemarketers, under significant pressure to enroll students,” engaged in Iowa Consumer Fraud Act violations, including:

  • Making false or misleading statements to prospective students in order to convince them to enroll.
  • Utilizing unfair and high-pressure sales tactics, including emotionally-charged appeals to persuade prospective students to make uninformed decisions to enroll.
  • Failing to disclose material facts to prospective students.
  • Misrepresenting to prospective students who wished to become teachers that an online Ashford education degree would allow them to become classroom teachers when, in fact, many Ashford graduates are subject to additional requirements that may require additional time, coursework, or money.
  • Charging a significant upfront, non-refundable “technology fee,” which Ashford did not refund even when a student dropped out shortly after making the payment. Ashford formerly assessed the fee in a student’s seventh week of attendance which, at times, ranged from $900 to $1,290.  Ashford now charges a $50 technology fee, per course, for its online programs.

$7.25 Million Payment
Through the settlement, called an Assurance of Voluntary Compliance, the company denies wrongdoing, but must pay $7.25 million to the state.  Miller anticipates that approximately $7 million of the payment will help reimburse former and current Ashford online students from Iowa, and approximately $250,000 will go toward administering the reimbursement program.  An undetermined number of Iowa’s Ashford online students will qualify for some level of reimbursement, which will be announced later.

Consumer Protection Division to Contact Eligible Iowa Online Students
The Consumer Protection Division will contact those Iowans deemed eligible, regardless of whether they previously filed a complaint.  Former and current online students do not need to contact the Consumer Protection Division to seek reimbursement.

Agreement Requires Ashford to Change Certain Admissions Practices Nationwide
The company also must comply with minimum standards in its future representations and disclosures to prospective and current students nationwide.  The agreement prohibits:

  • Using any “unconscionable or coercive tactic” to persuade a student to enroll or remain enrolled in Ashford.
  • Representing or implying that completion of any online Ashford College of Education degree program will lead a student to licensure or certification without additional steps, unless true.
  • Making false, deceptive, or misleading statements.
  • Omitting any material fact with the intent that a student rely on the omission.
  • Engaging in unfair practices.

Under the agreement, Ashford will require all incoming associate and bachelor degree candidates with no previous college credits to participate in a free two-week online orientation program.  Ashford also agrees to allow students to withdraw from their first course, at no cost, within the first three weeks.

Independent Authority to Review Compliance
As part of the agreement, Bridgepoint agrees to submit to an independent settlement administrator who will oversee its settlement compliance for three years.  The administrator will also provide annual reports to the state.

“We think oversight is a key part of the agreement,” Miller said.  “It gives a new independent watchdog the power to oversee how Ashford complies with the tough new standards we establish through this agreement.”

Bridgepoint must also provide mandatory, ongoing nationwide training for its recruiters, admissions counselors, and academic advisors to ensure they comply with the settlement.

About Bridgepoint Education Inc.
Bridgepoint Education, Inc., which formed in 2003, is a publicly traded company (NYSE: BPI) that is headquartered in San Diego.  The company operates two for-profit colleges, Ashford University and University of the Rockies.  The company bought The Franciscan University of the Prairies in Clinton in 2005 and renamed it Ashford University.

In its 2014 annual report filed March 17 with the U.S. Securities and Exchange Commission, as of December 31 Bridgepoint reported that nearly 96 percent of its 63,624 students were enrolled through Ashford University online.  796 students were enrolled at Ashford’s Clinton campus.  According to the Iowa Coordinating Council on Post-High School Education’s Iowa College and University Enrollment Report for fall of 2013, 739 Iowans were enrolled online.


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