The Department of Education (DOE) is asking the University of Arizona to pay millions of dollars after canceling student loans for borrowers who said they were cheated by a former for-profit college that the university bought in 2020.
The Biden administration canceled $72 million in student loans for 2,300 borrowers who said in August they were cheated by Ashford University, saying it would seek to recoup the money from the University of Arizona.
According to KPNX, Education Department officials said they had begun the process of asking the University of Arizona—which is already facing a $177 million budget shortfall—to pay back the money.
The University of Arizona denies liability, saying it is not responsible for the actions of Ashford University. The university 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.
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“The University of Arizona is not responsible for the actions of Ashford University,” a university spokesperson in a statement to KPNX.
The spokesperson said that when the DOE announced it was approving borrower defense to repayment claims of students who attended Ashford University, the University of Arizona “made clear” that these claims “were based on Ashford’s actions prior to UAGC acquiring Ashford.”
“While the Department has not indicated a timeline on recoupment, we remain encouraged that we will achieve an outcome that is best for the students of UAGC and the taxpayers of Arizona,” the spokesperson added.
Newsweek has contacted the University of Arizona and the DOE for further comment via email.
The DOE’s cancellation of loans for former Ashford students was based on a lawsuit that the state of California brought against Ashford and its parent company, Zovio, in 2017. A court ruled in favor of California in 2022 and imposed a civil penalty of $22.3 million against Ashford, which is being appealed. The court concluded that Ashford made numerous misrepresentations to students in order to get them to enroll.
Recruiters misled students about the cost to attend Ashford, how long it would take to obtain a degree, the amount and type of financial aid students would receive and the amount of debt that students would accumulate, the court concluded.
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 the necessary accreditation for those professions. Only 25 percent of Ashford students graduated within eight years of enrolling and their applications for borrower defense described the “inability to obtain employment, unexpected financial burdens, and an inability to complete their programs,” according to the DOE.
President Joe Biden has said his administration “won’t stand for colleges taking advantage of hardworking students and borrowers.”
He has also vowed to find other ways to provide widespread relief after his plan to cancel more than $400 billion in student debt was struck down by the U.S. Supreme Court in June last year. The plan would have canceled up to $20,000 in federal student loans for those with annual incomes below $125,000 or couples with incomes below $250,000.
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