Audit Finds Ashford U. Kept Student-Aid Money It Should Have Returned to Government

January 24, 2011

Ashford University failed to return more than a million dollars in federal aid awarded to students who later withdrew, and may have violated a federal ban on incentive compensation for college recruiters, an audit released on Monday by the Education Department's Office of Inspector General says.

According to the audit, Ashford, a for-profit institution in Iowa, rewarded recruiters based on their success in securing enrollments and improperly retained $29,000 in federal funds awarded to 38 out of the 85 students included in the inspector general's review. The inspector general extrapolated from that sample to conclude that the university improperly retained at least $1.1-million during the 2006-7 audit period.

In other cases, the university, which offers almost all of its courses online, took too long to return money awarded to students who withdrew or went on leaves of absence; kept credit balances without the proper authorization; and disbursed aid before students were eligible to receive the money.

The audit recommends that the Education Department require Ashford to return the improperly retained and obtained funds to the department and justify all salary adjustments made during the audit period.

In its response, the university disagreed with all of the audit's findings and several of its recommendations.

Sen. Tom Harkin, a Democrat of Iowa who has been conducting an inquiry into for-profit colleges, said the audit "continues to confirm the need for greater oversight of rapidly growing for-profit colleges that receive billions of dollars in taxpayer subsidies."

"It reveals the same troubling pattern of for-profit colleges' taking advantage of students and taxpayers that has been uncovered in my investigation," he said in a written statement.

It is now up to the Education Department to decide how to respond to the findings.