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Ashford University Settles for $7.25 M after AG Investigation

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    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 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.

    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.
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.

    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.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.
ASHFORD STATEMENT: 
    On May 15, 2014, Bridgepoint Education and Ashford University entered into an Assurance of Voluntary Compliance (AVC) with the Iowa Attorney General. The agreement provides full resolution of the Iowa Attorney General's allegations and Civil Investigative Demand, and resolves the State of Iowa's concerns regarding Bridgepoint's and Ashford's compliance with the Iowa Consumer Fraud Act, particularly with respect to Ashford's recruitment and enrollment practices.
    Bridgepoint Education and Ashford University expressly deny wrongdoing or liability of any kind, and have agreed to enter into this Assurance solely for the purpose of settlement and to resolve all issues raised regarding the Attorney General's inquiry. Specifically, Ashford denies ever using "unfair or high-pressure sales tactics, including emotionally-charged appeals to persuade prospective students to make uninformed decisions to enroll" or ever "making false or misleading statements to prospective students in order to convince them to enroll." Furthermore, for the past four years, Ashford student satisfaction surveys have shown that 93% of those students surveyed would recommend Ashford University to a friend or family member.
    
    The AVC, in which neither Bridgepoint nor Ashford admit any liability, contains several components including injunctive relief, nonmonetary remedies, and a payment of $7.25 million to the Iowa Attorney General to be used for restitution, costs, and fees. The AVC also provides for the appointment of a settlement administrator who, for a period of three years, will review Bridgepoint's and Ashford's compliance with the AVC terms. Bridgepoint and Ashford welcome the appointment of a settlement administrator and look forward to demonstrating the University's high quality admissions practices.
    In addition, since 2012, the Ashford Promise has provided students with the assurance they will incur no debt should they leave within their first three weeks. Moreover, student debt incurred at Ashford University is below the national average due to the University's affordable tuition. "Clearly, Ashford is and always has been committed to student success," said Dr. Richard Pattenaude, President of Ashford University. "Ashford University is proud of its high quality, affordable education and will continue to remain dedicated to long term student outcomes." 
    Related to this matter, Bridgepoint accrued $9 million in December 2013, split between both current and long-term liabilities. This continues to represent Bridgepoint's best estimate of the restitution, cost of non-monetary remedies, and future AVC-related legal costs. 
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