The Stench From Arizona’s Acquisition Of Ashford

Estimated Reading Time: 5 minutes

A rotten stench wafts from the muck surrounding the University of Arizona’s acquisition of Ashford University.

A rotten stench wafts from the muck surrounding the University of Arizona’s acquisition of Ashford University.

I need a shower. Maybe that will remove the stench from digging in the muck surrounding the University of Arizona’s acquisition in 2020 of the on-line college Ashford University.

While digging, I uncovered additional muck about higher education in general and about the bloated U.S. Department of Education.

Admittedly, the digging wasn’t very deep. It will take someone with more time and more tolerance for overpowering odors to get to the bottom of the rot.

The University of Arizona (UA) is in the throes of a leadership crisis and fiscal crisis. Many faculty members and outside critics claim that the crises were precipitated by the acquisition of Ashford. Given that UA paid one dollar to acquire Ashford, the claim seems unfounded.

On the other hand, there are cost-sharing and revenue-sharing agreements between UA and Ashford. But these are buried in a 340-page contract, which I have not read, and thus have no idea how the agreements have affected UA’s current finances and will affect future finances.

No doubt, the members of the Arizona Board of Regents also haven’t read the contract in its entirety.

It is a fact, though, that the U.S. Department of Education is trying to recoup $72 million in student loans from UA due to the acquisition. 

A story in the August 30, 2023 edition of Inside Higher Education explained why.

The federal agency had found that Ashford had repeatedly lied to students over a decade about the cost, time required, and value of its degree program. It concluded that an education at Ashford was “effectively worthless.” As such, the department has forgiven $72 million in student loans for more than 2,300 former Ashford students. It plans to recoup this amount from UA.

The Department of Education doesn’t have a high regard for Ashford, but, ironically, it’s difficult to have a high regard for the agency. That’s especially so after reading a report on the agency published by Open the Books in April 2019.

The report details the agency’s bloat, mismanagement, and doling out of billions of dollars to dubious institutions, including Ashford.

The report says that in fiscal year 2017, the department had given Ashford $283 million in direct payments and grants and indirectly through student loans. And in the fiscal years 2014 – 2017, it had given $2.4 billion. It gave this lucre in spite of Ashford having a graduation rate of only 16 percent.

Ashford ranked fifth in 2017 in the amount of money given to for-profit universities by the department. The University of Phoenix ranked first, having received $607 million, despite its graduation rate being only one percentage point higher than Ashford’s.

Amazingly, in the face of such rip-offs, the conventional wisdom is now saying that an on-line degree is just about as good as a brick-and-mortar degree and just about as accepted by employers—at least that is what the first ten pages of an internet search suggested when I researched the subject. However, none of the sources cited any scholarly studies showing that graduates of on-line colleges have gained as much knowledge, cognitive abilities, social skills, and marketability as graduates of brick-and-mortar colleges.

For sure, certain subjects can be learned just as well on-line as in-person. Yes, on-line learning is more convenient and less costly for segments of the population that can’t take four years out of their lives to attend college in-person and full-time. Traditional universities see on-line learning as the wave of the future and are making investments in it. There are many degrees that have little value in the marketplace, whether they are earned on-line or in-person.  And, artificial intelligence is going to have a dramatic impact on not only higher education but also K-12 education—assuming that enough energy will be found to power the massive server farms needed by AI.

This doesn’t mean, however, that a lot of strategic thinking has gone into the shift to on-line learning.  Moreover, there is too much public money sloshing around to understand the economics. Then there is this burning question: If on-line learning is so effective and the wave of the future, then why are universities, including the University of Arizona, continuing to build swank brick-and-mortar facilities, including massive and massively expensive sports facilities?

Don’t look to the U.S. Department of Education for answers. The agency has failed in achieving its founding mission and has become a bloated, bumbling bureaucratic behemoth—like so many of America’s institutions.

Big Government, Big Business, Big Education, and Big Media have gone from big to humongous.  Instead of technology disaggregating and decentralizing decisions and power, the opposite has happened. Citizens are buried in muck, squashed beneath huge unaccountable and unresponsive hierarchies, and led by elites with glaring ethical and mental impairments. In despair, citizens frantically pull the levers of democracy, only to find that the levers have been disconnected by their overlords.

On that note, I’ll end with an excerpt from the aforementioned 2019 report by Open the Books. The excerpt lists ten additional findings about the U.S. Department of Education. Be sure to pinch your nostrils while reading.

1. The 25 colleges and universities with the largest endowments in the country reaped $6.9 billion in Department of Education (ED) funding despite holding a quarter-trillion in existing assets, collectively. This money was distributed as grants, contracts, and direct payments (FY2017) as well as student loans (FY2017-FY2018).
2. The 50 lowest performing junior and community colleges in the nation received $923.5 million in ED student loans (FY2017-FY2018) and grants (FY2017). Of these 50 schools, the 10 which received the most federal funding had a 12 percent graduation rate, on average.
3. ED overpaid $11 billion in Pell grants and loans over a two-year period (FY2016-FY2017).
4. Nontraditional schools reaped millions of dollars in federal funding such as an international school for videogame design ($51.4 million), a school for wooden boat-making ($781,330), an Arizona college for gun-smithing ($10.4 million), a school for gambling and bartending ($9.5 million), and the Professional Golfers Career College ($4.5 million). These numbers are comprised of student loans (FY2017-FY2018) as well as contracts, grants, and direct payments (FY2017).
5. The average wage at ED in FY2017 was $109,918. The average employee cost taxpayers $143,992, including benefits. In May 2018, ED disclosed 3,818 employees – a large decrease from 4,642 employees in 2012.
6. Nearly $700 million in federal funding flowed to schools of cosmetology, beauty, and hair, including millions of dollars to industry juggernauts like Empire Beauty School ($65.6 million) and Tricoci University of Beauty Culture ($12.3 million) in the form of grants, direct payments, and contracts (FY2017), as well as student loans (FY2017-FY2018).
7. Federal funding of $10.5 billion flowed to for-profit colleges in FY2017. Just 10 for-profit schools received nearly 30 percent of this funding. Many for-profit colleges have been cited for alleged discrimination, harassment, and even fraud. This funding is comprised of grants, direct payments, and contracts (FY2017) as well as student loans (FY2017-FY2018).
8. ED spent $1.6 billion hiring companies to collect and disperse federal student loans.
9. ED employees spent 6,522 working-hours (FY2016) doing union activities rather than working their department jobs. During this time, employees’ hourly wages are still taxpayer funded. This practice is known as ‘official time.’ In March 2018, ED eliminated this policy, saving taxpayers roughly $500,000 annually. Employee unions are private organizations, not public entities.
10. The top five recipient states claimed 36 percent of all ED funding: California ($18.6 billion), Texas ($12.6 billion), New York ($11.9 billion), Florida ($9.5 billion), and Illinois ($7.2 billion). This funding included grants, contracts, direct payments (FY2017) as well as student loans (FY2017-FY2018).