Mar 4, 2024 - News

Scoop: Department of Education preparing to order UofA to repay Ashford loan debt

A man watching a football game.

University of Arizona president Robert Robbins in November. Photo: Chris Coduto/Getty Images

The U.S. Department of Education is trying to force the University of Arizona to pay back loan debt amassed by students who attended the for-profit, online Ashford University, which it acquired in 2020, Axios has learned.

Why it matters: The university is already facing a $177 million shortfall due to budgeting issues and revenue declines. Officials have told staff to prepare for layoffs.

  • The university has been under scrutiny for ignoring other red flags about Ashford's finances, and this new development adds more questions about its due diligence.

Catch up quick: UofA acquired Ashford and renamed the online school University of Arizona Global Campus (UAGC) in 2020.

  • University leaders "were intrigued by the possibility of acquiring an established all-online institution" to expand the university's demographic and geographic reach and build a new revenue stream, according to a report sent to the state last month.

The intrigue: Prior to the acquisition, Ashford had been accused of using deceptive recruitment tactics and was sued by the California Attorney General's Office.

  • UofA officials acknowledged in last month's report that they knew Ashford and its parent company, Zovio, were under federal and state investigation when they decided to buy it.

Flashback: The U.S. Department of Education announced last summer it would clear $72 million of student debt for 2,300 former students "cheated by Ashford."

Driving the news: A Department of Education spokesperson told Axios Phoenix late last week it is in the process of initiating a recoupment action against UAGC for the cost.

  • It did not say whether it will ask UofA to repay the entire $72 million.

What they're saying: "The University of Arizona is not responsible for the actions of Ashford University," UofA spokesperson Pam Scott told Axios in a statement.

  • "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."

Inside the room: Top UofA officials, including president Robert Robbins, met with members of Arizona's congressional delegation in D.C. last fall to share concerns about the Department of Education's likely recoupment plan.

  • Scott told Axios the meetings were to ensure the delegation knew the government's issues with Ashford occurred prior to Arizona's acquisition.

Yes, but: Those meetings don't appear to have spared the university from critique.

  • Rep. Raul Grijalva called UofA's decision to purchase Ashford "questionable" and told Axios he supports the Department of Education's effort to relieve students of their debt.
  • He said he trusted the department would work with UofA on a "fair solution."

What we're watching: Gov. Katie Hobbs last week slammed the university and Arizona Board of Regents (ABOR) — the state's higher education oversight entity — for mishandling its financial crisis.

  • Hobbs' spokesperson, Christian Slater, told us the governor's office is in communication with UofA and other stakeholders about the student loan issue, which is "of concern to the governor."
  • Hobbs is meeting with UofA and ABOR officials this week.

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