(CN) - Ashford University and the for-profit school's parent, Bridgeport Education, agreed to settle consumer-fraud claims in Iowa regarding its online programs for $7.25 million.
Iowa Attorney General Tom Miller claimed that the school's recruitment, enrollment and post-enrollment practices all violated the state's Consumer Fraud Act. He alleged Ashford "used unconscionable sales practices," with telemarketers lying to prospective students to have them enroll in online degree programs.
The telemarketers allegedly misinformed would-be teachers that an education degree from Ashford would get them classroom-teaching work.
"In fact, many Ashford graduates are subject to additional requirements on a state-by-state basis that may include student teaching or practicum experience, additional coursework, additional testing, or earning an additional degree, all requiring substantial additional expenditures by students," an assurance of voluntary compliance filed Thursday states.
After six weeks of enrollment, Ashford also charged all students between $900 and $1,290 in unfair technology-services fees that it kept regardless of how long the students remained enrolled, according to the 23-page agreement.
"Our investigation found what we allege was troubling conduct by Ashford recruiters, including misleading prospective students to encourage them to sign on the dotted line," Miller said Friday. "Unfortunately for many Ashford students, they didn't get the degree they hoped for or the job they were led to believe they'd get after graduating. What they did end up with was a crushing amount of student loan debt."
In reaching the settlement, Ashford admits no wrongdoing. Miller said $7 million of the money will be go toward reimbursing former and current Ashford students from Iowa, with the remaining $250,000 spent on administering the reimbursement program. Details of the reimbursements will be announced later.
Under the settlement, Ashford agreed to "clearly and conspicuously" disclose, in all enrollment applications and academic catalogs, its undergraduate and graduate graduation rates and median-loan debt for each program. It will also train admission counselors regarding the transferability of credits to other schools, financial-aid practices and career-counseling skills.
Ashford lastly must add measures to increase retention and graduation rates. It agreed to require all incoming associate and bachelor degree candidates with no previous college credits to take a free two-week online orientation program.
Students can withdraw from their first course, at no cost, within the first three weeks.
An independent settlement administrator will be appointed to oversee Ashford and Bridgeport's settlement compliance for three years. Annual reports must be submitted to the state, Miller said.
Ashford did not immediately respond to a request for comment Friday.