California's attorney general sued an online, for-profit university Wednesday, alleging officials made false promises to entice students and illegally tried to collect their overdue debt.
The suit filed by Attorney General Xavier Becerra against San Diego-based Ashford University alleges the school and its publicly traded parent company, Bridgepoint Education Inc., used illegal business practices to deceive and defraud students.
The suit filed in Alameda County Superior Court says school representatives lied to prospective students over how much financial aid they could get, the costs of attending, how many academic credits from other schools would transfer to Ashford or from Ashford to other institutions, and about Ashford's ability to prepare students for careers including teaching, medical billing and social work.
It says many of the school's roughly 40,000 students had low incomes and were unable to pay their tuition and other debts, yet Ashford threatened students and imposed unlawful debt collection fees.
More than two-thirds received federal student aid, according to the lawsuit. Nearly three-quarters of its students never graduated. The suit asks a judge to reimburse students, impose civil penalties, and bar the school from similar practices in the future.
Anna Davison, the school's vice president of corporate communications and investor relations, said Bridgepoint institutions serve as a model for how online education can better the lives of people who did not, or who were unable to, pursue more traditional avenues to degrees.
She said Ashford has improved the lives of thousands of students "by providing a high-quality education that serves communities and gives families the opportunity to succeed."
The school will fight the lawsuit, Davison wrote.
Becerra said in a statement that Ashford had stolen the American Dream from its students.
"This for-profit college illegally misled students about their educational prospects and unfairly saddled them with debt," he wrote.
Students only later learned that their degrees would take months or years longer and cost much more than they had been promised, and might not advance their careers, the lawsuit says. Students owe billions of dollars in federal loans, and the school says it is owed hundreds of millions of dollars directly, the suit says.
A bachelor's degree at Ashford is currently expected to cost more than $60,000 including tuition and fees, books and supplies, the suit says, nearly double the cost at San Diego State University or California State University-East Bay, the suit says.
The lawsuit alleges the university used "admissions counselors" who were really salespeople working out of a call center under pressure to meet enrollment targets.
Ashford is also accused of misleading investors and the public in Securities and Exchange Commission filings by overstating the rate of graduates who said that their Ashford degree adequately prepared them for their current job.