Ashford U. Faces New Setback in Battle Over GI Bill Funds

Sandy Huffaker for The Chronicle

California regulators have shot down Ashford University’s request for GI Bill eligibility — dealing the for-profit college a significant blow that could reverberate nationwide.

Under federal rules, colleges that serve veteran students are supposed to be approved by the veterans agency in their home state. That one state’s approval then allows a college to serve veteran students from all 50 states.

Ashford University’s parent company, Bridgepoint Education, is based in San Diego. In a fourth-quarter earnings conference call on Wednesday afternoon, Andrew S. Clark, Bridgepoint’s chief executive, said the company was still analyzing the notification letter it received from California, and had not yet decided upon its next move.

“We’ve conducted ourselves in good faith with California, and we will continue to do so,” Clark said.

A recent Chronicle investigation showed how Ashford used legal maneuvering and political lobbying in an attempt to avoid California’s tough oversight and instead designate Arizona as its headquarters for GI Bill money. The college opened a small Phoenix office, and its plan was aided by U.S. Sen. Jeff Flake, Republican of Arizona, and the office of Doug Ducey, Arizona’s governor. Email records obtained by The Chronicle showed a cozy relationship between Ashford’s lobbyist and Arizona regulators.

At stake: tens of millions of dollars in GI Bill and other military benefits that flow to Ashford annually.

After The Chronicle asked questions about the legality of using Arizona as the gatekeeper, the U.S Department of Veterans Affairs cracked down on Ashford, and threatened to cut off its GI Bill funding unless it obtained proper California approval — or moved its entire operation to Arizona.

Wednesday’s rejection by California regulators suggests that it might not be easy for Ashford to fix its GI Bill problem. In a letter to Ashford officials, the California State Approving Agency for Veterans Education wrote that it will not act on Ashford’s request for approval because the college “failed to provide sufficient information and documentation necessary to resolve deficiencies” that the state had previously flagged in Ashford’s application, which was initially filed on January 5.

Ashford has the option to reapply with California if the college chooses to do so, or it could ask the VA to authorize GI Bill payments even though it lacks California’s approval — an unlikely scenario given the current adversarial dynamic between Ashford and the VA.

Enrolling Veterans Once Again

For now, GI Bill dollars are likely to continue flowing to Ashford. After the VA threatened to cut off funding in November, Ashford responded by asking an appeals court to overturn the agency’s findings that the university lacked proper state approval. The VA has said it will wait until that court battle is concluded before it makes any final decision — but only if Ashford at least attempted to get approved by California.

Following The Chronicle’s investigation, Ashford announced in November that it would voluntarily halt new GI Bill enrollments — an action that negatively impacted fourth-quarter performance, the company said Wednesday. But Clark told investors on the call that the suspension is no longer in effect, and that Ashford resumed signing up new GI Bill students earlier this month.

In an email to The Chronicle, Vickie Schray, a Bridgepoint lobbyist, wrote: “We made the decision to reopen new enrollments following a thorough review and analysis of the current status of administrative and legal proceedings. New students who wish to use their GI Bill benefits at Ashford University will be asked to acknowledge a detailed ‘VA Disclosure Acknowledgment’ prior to enrollment.”

A VA spokesman said the agency planned to notify current Ashford students about Wednesday’s decision by California regulators, “as we have been updating them throughout the process.” The spokesman, Curt Cashour, said the VA was “currently assessing” the state’s decision, and its impact. Cashour declined to comment on how California’s action might affect the pending litigation between Ashford and the VA.

Michael Vasquez is a senior investigative reporter. Follow him on Twitter @MrMikeVasquez, or email him at michael.vasquez@chronicle.com.