Scoop: Department of Education preparing to order UofA to repay Ashford loan debt
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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."
- The department indicated at the time that it may go after Ashford's new owner — UofA — to recoup the money.
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.