The Biden administration announced a significant relief measure, forgiving $4.5 billion in federal student loans for 261,000 borrowers who attended Ashford University. This decision follows a lawsuit filed by the California Department of Justice against Ashford University and its parent company, Zovio, Inc., alleging deceptive practices. The lawsuit claimed that the university misled students with false promises and inaccurate information about costs and career outcomes.
The loan forgiveness targets borrowers who studied at Ashford University between March 1, 2009, and April 30, 2020. These dates encompass a period during which the institution, primarily operating online, allegedly engaged in misleading recruitment tactics. Evidence gathered during the lawsuit prompted the California Department of Justice to request loan cancellation, a request the Education Department granted.
"Numerous federal and state investigations have documented the deceptive recruiting tactics frequently used by Ashford University," stated U.S. Under Secretary of Education James Kvaal.
Ashford University, acquired by the University of Arizona in 2020, faced scrutiny for its practices long before this announcement. Zovio, Inc., the parent company, approved a plan to cease operations in late 2022. Despite acquiring Ashford, the University of Arizona has yet to comment on the loan forgiveness or its implications for the institution.
The Biden administration's move forms part of a larger initiative to address federal student loan burdens. Since President Biden took office, over 5 million borrowers have seen their debt forgiven, amounting to a total of $183.6 billion in relief. This particular case highlights ongoing concerns about for-profit educational institutions and their impact on students.
"In reality, 90 percent of Ashford students never graduated, and the few who did were often left with large debts and low incomes," noted U.S. Under Secretary of Education James Kvaal.
The case against Ashford University serves as a cautionary tale about the consequences of misleading educational practices. With the Biden administration's intervention, affected borrowers receive much-needed relief from debts incurred under false pretenses.