The Clinton Herald, Clinton, Iowa

Local News

May 16, 2014

UPDATE: Ashford, Bridgepoint will pay $7.25 million fraud settlement

CLINTON — Ashford University and parent company Bridgepoint Education Inc. have agreed to a $7.25 million settlement, part of which will require the for-profit institution to alter recruiting and enrollment practices for online students. While Bridgepoint has denied any wrongdoing, it agrees to the terms of the settlement, otherwise known as an Assurance of Voluntary Compliance.

The settlement also prohibits Ashford from:

• Using coercive tactics to persuade students to enroll or remain enrolled;

• Implying that completion of an online Ashford College of Education degree will lead to licensure or certification without additional steps unless it is true;

• Making false, deceptive, or misleading statements;

• Omitting any factual material that a student may rely on; and

• Engaging in unfair practices.

During a press conference in Des Moines on Friday morning, Iowa Attorney General Tom Miller said the settlement caps off a three-year investigation. He is working with 17 attorneys general who are actively investigating four other for-profit universities: Corinthian Colleges International, Career Education Corporation, ITT and Education Management Corporation.

Ashford enrolled over 869 students on campus in 2013-2014. Miller said the DOJ "did not discover a lot of problems" with on-campus practices. However, an estimated 57,235 students take online courses with the for-profit institution.

The settlement will allow roughly 5,000 online students from Iowa (1.4 percent of Ashford's online enrollment) to seek reimbursements for being victimized by false advertising and questionable recruiting practices. Those students will be entitled to $7 million worth of the settlement; the remaining $250,000 will be used to set up a restitution program for the students.

No on-campus students are entitled to reimbursements.

Miller said the DOJ felt obligated to investigate these practices taking place within state borders after being tipped off to "boiler-room tactics."

"It's a concept that we've seen in the consumer area from time to time," Miller said during the press conference. "It's a whole group of people making phone calls with a lot of pressure to make sales, or in this case, sign up students (with) increasingly lax requirements in terms of how you make those sales, including making representations that weren't true.

"We were concerned that students were making these kinds of decisions based on this kind of marketing plan."

Miller added that Bridgepoint/Ashford deployed "lead generators." Third-party companies contacted prospective students under false pretenses, later selling the students' information to for-profit institutions.

"We've discovered over time they are increasingly deceptive in terms of how they market to students and how they get the student's name..." Miller said, adding the lead generators made "fraudulent representations" to obtain information. "Typically they will sell to three or four or five for-profit institutions these names and those colleges rush to make the first call to that student. We were concerned about this environment, how it affected students in Iowa and students across the country. We felt some responsibility for our other states, of course."

Other university problems stemmed from a misrepresentation that online education-degree seekers would receive proper teaching licensure. Miller said those were misleading claims to college recruits.

"It's nationally implied that if you go to a college for four years, or the equivalent of four years, for a for-profit online college," he said, "and if you majored in elementary or secondary education, you'd be able to... teach in Iowa or any other state. But, of course, they don't have practice teaching (via the online courses). People go through the four years and have to take additional work to be able to get a license."

The DOJ also found that Ashford enrolled online students who weren't qualified for post-secondary education. Part of the settlement incentivizes the school to enroll eligible students.

To ensure Bridgepoint/Ashford comply with terms of the AVC, Thomas J. Perrelli, former U.S. Associate Attorney General for President Obama, has been appointed "settlement administrator." Perrelli will work independent of the DOJ and the university to make sure the company complies with settlement terms. He is required to submit annual reports to the DOJ for three years.

Bridgepoint/Ashford issued a statement Friday afternoon, denying the allegations but accepting settlement terms:

"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," read a Bridgepoint/Ashford press release. "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 percent of those students surveyed would recommend Ashford University to a friend or family member..."

Miller told the press that the institution has made positive changes since his investigation was initiated.

"I will say that we've noticed over time that there's been changes in the conduct in the university and the corporation," he said, "that some of the things we were most concerned about have been improved considerably. But that's not good enough."

Miller credited U.S. Sen. Tom Harkin, D-Iowa, with "leading the charge" on for-profit college issues. Harkin, in turn, issued a statement praising Miller's efforts along with the departments.

"I welcome today's news on behalf of Iowa's students and applaud Attorney General Miller for undertaking this investigation," Harkin said.

 

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