Biden Admin Discharges Another $4.5 Billion in Student Loan Debts for 261,000 Borrowers

President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. Mario Tama/Getty Images

The U.S. Department of Education on Jan. 15 said it has approved a discharge of $4.5 billion in federal student loans owed by former students of a for-profit university, citing evidence of “deceptive” practices at the institution.

The relief applies to 261,000 borrowers who attended Ashford University from March 1, 2009, through April 30, 2020. Eligible borrowers will receive email notifications in the coming days and will not need to take additional action, regardless of whether they have applied for the discharge.

A mostly online school with more than 80,000 students at its peak, Ashford has faced extensive scrutiny over its recruitment practices. Since 2017, the state of California has pursued legal action against Ashford for allegedly using false promises to entice students to enroll.

In 2022, a California court found Ashford and its then-parent company, Zovio, liable for misleading students and fined them $22 million. A state appeals court upheld the trial verdict in 2024 and reduced the penalty by $933,453.

The trial verdict concluded that Ashford created a “high-pressure, fear-based” culture in its admissions department, with former recruiters testifying how managers pressured them to mislead prospective students to meet enrollment targets. Students also testified they were falsely assured that an Ashford degree would qualify them for jobs like teaching or nursing, only to later discover their degrees did not meet the licensure requirements.

“In reality, 90 percent of Ashford students never graduated, and the few who did were often left with large debts and low incomes,” Under Secretary of Education James Kvaal said in a statement. “Today’s announcement will finally provide relief to many students who were harmed by Ashford’s illegal actions.”

Wednesday’s loan discharges were requested by California Attorney General Rob Bonta, whose office led the litigation against Ashford, the Education Department said, noting that it conducted its own review of the evidence before approving the relief.

The department also said it would seek to ban Andrew Clark, the founder and CEO of Zovio, from participating in federal education programs.

Outside of California, Ashford has been sued or investigated by other federal and state agencies, including the U.S. Justice Department, Securities and Exchange Commission, Consumer Financial Protection Bureau (CFPB), and the attorneys general of Iowa, Massachusetts, New York, and North Carolina. In 2015, Ashford discharged $23.5 million in high-interest private loans and paid an $8 million civil penalty to settle with CFPB.

The school continues to operate today, under a new identity.

In 2020, amid ongoing litigation in California, Zovio sold Ashford to the University of Arizona as part of a deal to establish a nonprofit entity, the University of Arizona Global Campus (UAGC). The agreement transferred Ashford’s operations, including its leadership, faculty members, academic programs, and 35,000 students, to UAGC for a nominal purchase price of $1, with Zovio providing services to UAGC for 15 years in exchange for a share of the online college’s revenue.

In 2022, after the California verdict, the University of Arizona removed Zovio from the arrangement and absorbed Zovio’s assets.