Scoop: Department of Education preparing to order UofA to repay Ashford loan debt

AXIOS Phoenix

Jessica Boehm

March 4, 2024

The U.S. Department of Education is trying to force the University of Arizona to pay back loan debt amassed by students who attended the for-profit, online Ashford University, which it acquired in 2020, Axios has learned.

Why it matters: The university is already facing a $177 million shortfall due to budgeting issues and revenue declines. Officials have told staff to prepare for layoffs.

• The university has been under scrutiny for ignoring other red flags about Ashford’s finances, and this new development adds more questions about its due diligence.

Catch up quick: UofA acquired Ashford and renamed the online school University of Arizona Global Campus (UAGC) in 2020.

• University leaders “were intrigued by the possibility of acquiring an established all-online institution” to expand the university’s demographic and geographic reach and build a new revenue stream, according to a report sent to the state last month.

The intrigue: Prior to the acquisition, Ashford had been accused of using deceptive recruitment tactics and was sued by the California Attorney General’s Office.

• UofA officials acknowledged in last month’s report that they knew Ashford and its parent company, Zovio, were under federal and state investigation when they decided to buy it.

Flashback: The U.S. Department of Education announced last summer it would clear $72 million of student debt for 2,300 former students “cheated by Ashford.”

• The department indicated at the time that it may go after Ashford’s new owner — UofA — to recoup the money.

Driving the news: A Department of Education spokesperson told Axios Phoenix late last week it is in the process of initiating a recoupment action against UAGC for the cost.

• It did not say whether it will ask UofA to repay the entire $72 million.

What they’re saying: “The University of Arizona is not responsible for the actions of Ashford University,” UofA spokesperson Pam Scott told Axios in a statement.

• “While the Department has not indicated a timeline on recoupment, we remain encouraged that we will achieve an outcome that is best for the students of UAGC and the taxpayers of Arizona.”

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