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Online College Settles Lawsuit with Iowa

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DES MOINES — Thousands of Iowa students could be in line for refunds from a California-based for-profit school.

At a Friday news conference, Iowa Attorney General Tom Miller said Ashford University and its San Diego-based parent company Bridgepoint Education Inc. have agreed to a $7.25 million settlement that requires it to change certain recruitment and enrollment practices, which Miller alleged ran afoul of Iowa’s consumer fraud law.

“We’ve put together a strong, good settlement that ensures reform and provides significant restitution for Iowa students,” Miller said. He estimated that up to 5,000 Iowans who enrolled in classes could be affected by the settlement, which does not apply to Ashford’s “on-ground” facility in Clinton.

Under the settlement, Bridgepoint and Ashford did not admit any wrongdoing, the attorney general said, but did agreed to make major changes in their practices nationwide and to submit to independent oversight.

The company also must pay $7.25 million to the state. Miller anticipated that about $7 million would help reimburse online Ashford students from Iowa, and about $250,000 will go toward administering the reimbursement program. An undetermined number of Iowa’s online Ashford students will qualify for some level of reimbursement, which will be announced later, he said.

Under the agreement, Ashford will require all incoming associate and bachelor’s degree candidates with no previous college credits to participate in a free two-week online orientation program. Ashford also agreed to allow students to withdraw from their first course, at no cost, within the first three weeks.

The settlement caps a three-year investigation into complaints that the online school’s conduct resulted in students not completing their educational programs and not obtaining professional licenses, and saddled them with substantial student loan debt.

“I was clearly ripped off,” said Patrick Kean, a Navy veteran who took education classes through Ashford for two years. “I don’t think there’s any other way to describe it. When you come out with nothing but a piece of paper for $30,000, it’s not a good deal.”

Kean said Ashford officials did not tell him his education degree would not qualify him to teach in any state. He said he also found out after the fact that his credits would not transfer to any Iowa school — not even Ashford’s own land-based affiliated university in Clinton.

Miller said Kean’s case was an example of how the online school’s marketers misrepresented 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, more coursework or additional money.

“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,” he added. “What they did end up with was a crushing amount of student loan debt.”

Miller alleged that Ashford used “unconscionable sales practices through which its telemarketers, under significant pressure to enroll students,” made false or misleading statements to prospective students in order to convince them to enroll. Ashford recruiters also used unfair and high-pressure sales tactics, including emotionally-charged appeals to persuade prospective students to make uninformed decisions to enroll in violation of Iowa’s consumer fraud act.

The online business also charged a significant upfront, non-refundable “technology fee,” which Ashford did not refund even when a student dropped out shortly after making the payment, he said. Ashford formerly assessed the fee in a student’s seventh week of attendance which, at times, ranged from $900 to $1,290, but now charges a $50 technology fee per course for its online programs.

The Attorney General’s consumer protection division will contact those Iowans deemed eligible, regardless of whether they previously filed a complaint. Online students do not need to contact the Consumer Protection Division to seek reimbursement, according to Miller’s office.

As part of the agreement, Bridgepoint agrees to submit to an independent settlement administrator who will oversee its settlement compliance for three years. Bridgepoint also must provide mandatory, ongoing nationwide training for its recruiters, admissions counselors, and academic advisers to ensure they comply with the settlement.

At Friday’s news conference, Miller said his office is looking into similar complaints brought against four other businesses offering online college credit to Iowans.

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