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For-profit online college faces lawsuit for allegedly misleading students

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Attorney General Xavier Becerra, center, is seeking restitution for students of Ashford University, in addition to a permanent injuction and civil penalties for the San Diego-based college and its parent company, Bridgepoint Education. (Daniel Kim/Special to S.F. Examiner)
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A lawsuit alleging unlawful business practices and deceit of its students has been filed against a California-based for-profit online college that saw its enrollment grow by some 50,000 students in just five years.

California Attorney General Xavier Becerra announced at a news conference at San Francisco State University on Wednesday that he is suing Ashford University, a San Diego-based online university, and its parent company Bridgepoint Education.

Becerra said a two-year investigation into Ashford’s operations revealed that the college used illegal debt collection practices and made false promises to its students regarding their degrees, the amount of financial aid they would receive, credit transfers and job placement after graduation in a push for enrollment.

Becerra’s office is seeking restitution for students, a permanent injunction prohibiting similar activities in future and civil penalties.

“[At SFSU] you have everything that makes a campus for a student to be able to learn and grow,” Becerra said, calling the public university “very different” from Ashford, which he said “charges way more than San Francisco State for a degree which they claim will give you something similar.”

According to Becerra, Ashford charges its students $13,560 annually for tuition, and student loans average about $34,000 after graduation. At SFSU, students pay $7,254 for tuition comparatively and average a student loan debt of $17,000.

Becerra also alleges Ashford misled its investors in an effort to build an “online empire” with more than 80,000 students after buying a small non-profit Catholic university in Iowa in 2005 to earn accreditation and access to the school’s federal funds. The brick-and-mortar campus was closed in 2012, and the college rebranded itself shortly afterward.

The complaint against the college alleges that it preyed on military veterans, whose education is largely funded by the Servicemen’s Readjustment Act of 1944, also known as the G.I. bill, and low-income and minority students, and that it inflated its percentage of working alumni in filings with the Securities and Exchange Commission.

It also alleges that admissions counselors were pressured to meet enrollment targets and subjected to psychological abuse when they fell short of these goals.

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