Durbin, DeLauro Send Letter Urging Department of Education to Recoup Funds from Predatory, For-Profit Colleges University of Phoenix and Ashford University
WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL) and U.S. Representative Rosa DeLauro (D-CT-03) sent a letter to Department of Education Secretary Miguel Cardona urging him to recoup funds from for-profit colleges University of Phoenix (Phoenix) and Ashford University (Ashford) after the agency cancelled student debts for borrowers that were defrauded by those institutions.
“For far too long, predatory for-profit colleges like Ashford and Phoenix have preyed on students, especially veterans, students of color, and low-income students,” the lawmakers wrote. “We therefore urge the Department to aggressively recoup funds from these institutions. This would send a strong warning signal to other predatory for-profit colleges that there are substantial financial consequences for defrauding students.”
In their letter, Durbin and DeLauro advocated for stronger enforcement measures to protect student borrowers, including streamlining borrower defense applications for other former Ashford and Phoenix students and scrutinizing whether these schools remain eligible for federal student aid.
“We also urge the Department to continue providing accessible and streamlined avenues for other defrauded borrowers who attended Ashford and Phoenix to receive relief through borrower defense to repayment,” the lawmakers continued. “Finally, we urge the Department to review whether Ashford and Phoenix—each of which has engaged in extensive and sustained misconduct that has violated Department regulations, including the prohibition on making substantial misrepresentations to students—continue to remain eligible for federal student aid.”
U.S. Senator Elizabeth Warren (D-MA) and Jeff Merkley (D-OR) and U.S. Representatives Pramila Jayapal (D-WA-7), Jan Schakowsky (D-IL-9), Lloyd Doggett (D-TX-35), Nydia Velázquez (D-NY-7), Maxine Waters (D-CA-43), Barbara Lee (D-CA-12), and David Trone (D-MD-6) also joined the letter.
Durbin has repeatedly called out Ashford and Phoenix for their predatory practices against student borrowers, particularly scamming attendees out of thousands of dollars in exchange for a phony college degree. While he applauded the Department’s move to approve $1.56 million in borrower defense claims for former Phoenix students in Illinois and $3.6 million in relief for Illinois student borrowers who attended Ashford, Durbin has urged the Department to ensure that federal student aid does not go toward predatory for-profit schools like Ashford and Phoenix.
Durbin has also cautioned credible universities against purchasing nefarious for-profit colleges as they accept the for-profit colleges’ liabilities and poorly run programming. In September, Durbin wrote to the University of Idaho on the dangers of purchasing Phoenix, reminding the University of Idaho that Phoenix has a history of illegally recruiting military service members,using misleading advertisements, and hiring executives who led other defunct for-profit colleges. Similarly, Durbin advised the University of Arizona against purchasing Ashford in 2020. Despite Ashford’s numerous state and federal investigations and law suits for fraudulent and predatory practices, Arizona went through with the sale. Ashford’s administration still runs the operations of the same program, now disguised as “University of Arizona Global Campus,” including the marketing and recruitment practices that continue to prey upon students.
Both Ashford and Phoenix have a track record of wrongdoing, as detailed in investigations into the for-profit colleges. After reviewing the information found in a Federal Trade Commission (FTC) investigation in 2019, the Department concluded that Phoenix deceived prospective students by using disingenuous marketing and false advertisements. Phoenix continuously claimed the for-profit college could grant access to exclusive job opportunities with corporate sponsors, while in reality, Phoenix misrepresented their relationship with corporate partners and employment options. Predatory for-profit colleges like Phoenix often aggressively market to students in hopes of accessing funding like the Title IV program, the GI Bill, and the Department of Defense’s Tuition Assistance program.
The Department also found that Ashford’s misconduct included widespread misrepresentations about the cost of attendance, ability to transfer credits, its accreditation and licensure status, and the length of is programs. Some students were told they would not incur any out-of-pocket costs and were eligible for Pell Grants, but later discovered they had reached lifetime loan limits while enrolled, forcing them to withdraw with debt but no degree. Ashford recruiters also told students they could transfer credits easily. These students, however, often were unable to transfer credits both into Ashford and to other institutions.
The full letter can be viewed here and below:
November 3, 2023
Dear Secretary Cardona:
We write regarding the Department of Education’s (Department) recent borrower defense to repayment discharges for some students who were defrauded by Ashford University (Ashford)—now known as the University of Arizona Global Campus (UAGC)—and the University of Phoenix (Phoenix). We applaud your decision to provide relief to which these students are entitled. We write to express our strong support for the Department’s announced decision to recoup funds from Ashford and Phoenix, so that taxpayers are not left holding the bag and other predatory for-profit colleges are on notice that they will be held accountable for unscrupulous behavior.
For far too long, predatory for-profit colleges like Ashford and Phoenix have preyed on students, especially veterans, students of color, and low-income students. The Department found that Ashford’s misconduct included widespread misrepresentations about the cost of attendance, ability to transfer credits, its accreditation and licensure status, and the length of its programs. For example, students who were told that they would not incur any out-of-pocket costs and were eligible for Pell Grants later found they had reached lifetime loan limits while enrolled, forcing them to withdraw with debt but no degree. Further, Ashford recruiters told students they could transfer credits easily and compared the length of Ashford’s bachelor’s degree programs to four-year programs at other institutions. However, students frequently were unable to transfer credits both into Ashford and to other institutions, and Ashford’s bachelor’s programs were structured to be completed in five years.
The Department similarly found that Phoenix defrauded students. Based on the Federal Trade Commission’s (FTC) 2019 investigation into Phoenix—which resulted in the largest financial settlement ever reached between the FTC and a for-profit college—the Department found that Phoenix used a misleading national advertising campaign. Phoenix misrepresented its employment partnerships to prospective students, claiming to have partnerships with Fortune 500 companies like Microsoft, AT&T, and Yahoo. Phoenix also told prospective students that they would receive hiring preferences and connections to high-profile employers, which motivated students to enroll. In reality, Phoenix’s management knew that its corporate partnerships did not provide any benefits to students, and one senior vice president even called the advertising campaign “smoke & mirrors.”
We welcome the Department’s announcement that borrowers who applied for borrower defense to repayment and attended Ashford from March 2009 to April 2020, and Phoenix from September 2012 to December 2014, have received relief. These discharges, which resulted in full loan forgiveness for more than 2,300 Ashford borrowers and more than 1,200 Phoenix borrowers, totaled $72 million and $37 million, respectfully. While this is a victory for defrauded students, it is Ashford and Phoenix, not taxpayers, which should foot the bill. We therefore urge the Department to aggressively recoup funds from these institutions. This would send a strong warning signal to other predatory for-profit colleges that there are substantial financial consequences for defrauding students.
We also urge the Department to continue providing accessible and streamlined avenues for other defrauded borrowers who attended Ashford and Phoenix to receive relief through borrower defense to repayment. We appreciate the efforts you are making to have partners inform other students of their eligibility for relief, and we strongly encourage direct outreach by the Department to the thousands of students who attended Ashford and Phoenix during the relevant periods but have not yet filed a borrower defense claim.
Finally, we urge the Department to review whether Ashford and Phoenix—each of which has engaged in extensive and sustained misconduct that has violated Department regulations, including the prohibition on making substantial misrepresentations to students—continue to remain eligible for federal student aid. Ashford and Phoenix repeatedly have deceived students, raked in federal dollars, and allowed their executives to profit at taxpayers’ expense. In the 2021-22 school year, Ashford’s and Phoenix’s revenue from federal dollars were more than $183 million and more than $616 million, respectively. These amounts from federal student aid accounted for nearly 64 percent and 79 percent of the schools’ total revenue, respectively.
It is time for the Department to hold these predatory schools accountable. We look forward to your prompt response.
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