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US government cancels loans for former Ashford University students and plans to recoup costs

President Joe Biden, center, delivers remarks on recovery efforts for the Maui wildfires and the response to Hurricane Idalia, in the Roosevelt Room of the White House, Wednesday, Aug. 30, 2023, in Washington. (AP Photo/Evan Vucci)

WASHINGTON (AP) — The Biden administration is canceling $72 million in student loans for 2,300 borrowers who say they were cheated by Ashford University, a former for-profit college that was purchased by the University of Arizona in 2020.

The Education Department announced the action Wednesday, saying it will seek to recoup the money from the University of Arizona.

The university denies any liability, saying in a statement that it had “absolutely no involvement in, and is not directly or indirectly responsible for, the actions of Ashford and its parent company” and will be "assessing its options.”

Before its sale, Ashford was an online for-profit college that enrolled more than 100,000 students. It was owned by the company Zovio and based in San Diego.

A California court in 2022 found that Ashford frequently lied to students to get them to enroll. Its recruiters misled students about the college's accreditation, costs and the amount of time it would take to graduate, the court concluded.

That lawsuit, brought by the state of California, was the basis of the Education Department's cancellation.

President Joe Biden said his administration “won’t stand for colleges taking advantage of hardworking students and borrowers.”

“These borrowers were lied to about the cost of attending Ashford, were misled about how long it would take to get a degree, and were deceived about the transferability of Ashford credits,” Biden said in a statement. “They deserve better.”

The action will automatically discharge loans for 2,300 borrowers who attended Ashford from March 2009 through April 2020 and applied for cancellation through the Education Department's borrower defense program. Those borrowers will see their loan balances zeroed out, and they will be refunded for payments on their federal loans.

California Attorney General Rob Bonta encouraged other former Ashford students to apply for relief if they were deceived.

“What Ashford University did to its students was unconscionable and illegal,” Bonta said. “That’s why the California Department of Justice took Ashford and its parent company to court.”

Under its previous ownership, Ashford's recruiters told students they would be able to work as teachers, social workers, nurses and drug and alcohol counselors, but the school never got accreditation for those professions, according to California's lawsuit.

Recruiters also told potential students they would never face out-of-pocket costs, which wasn't always true, and they boasted about “accelerated” programs, even though the bachelor's degree programs were structured to take five years to finish, the suit said.

Only 25% of Ashford students graduated within eight years of enrolling.

The court ruled in favor of California in 2022 after an 18-day trial and imposed a civil penalty of $22.3 million against Ashford. The penalty is being appealed.

The University of Arizona purchased Ashford University in 2020 and turned it into an online branch of the school, changing its name to the University of Arizona Global Campus.

It's one of several for-profit colleges that have been purchased and absorbed by nonprofit universities, including Purdue University's purchase of Kaplan University, and the University of Idaho's purchase of the University of Phoenix, which is expected to be finalized next year.

The Biden administration is separately taking steps to propose widespread student debt cancellation after the Supreme Court rejected the president's previous proposal in June. The Education Department is gathering negotiators for a rulemaking process that will get underway in October.

The department said it plans to issue a final rule on cancellation sometime next year.

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The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.