No Loan School Pleads Out to Federal Trade Commission Act Violations

NEW YORK ( MainStreet) — At the center of the student loan crisis are--you guessed it--student loans. But what if you went to a school that refused to accept them?

Ashworth College, a for-profit distance learning vendor, won't take them.

"Ashworth does not accept or offer Federal financial aid--Title IV funds--or private student loans because the College strongly believes that higher education should be affordable and that students should be able to complete their program without the burden of student loans," said Ashworth CEO Rob Klapper. "To make that possible, Ashworth strives to make its tuition affordable, with per-credit tuition that typically tracks the cost of community college. Ashworth also offers flexible payment options so students can 'pay as they go.'” Klapper stated that “Ashworth students graduate without student loan debt."

Ashworth has some of the trappings of a traditional college: a coat of arms, a mascot (the Knights), school colors (maroon and white) and a motto: Ditto cum Scientia. Founded in 1987, it has a current enrollment of some 50,000 students.

But the Norcross, Ga.-based cyber school also has the stigma of other for-profit colleges--it has been sanctioned by a federal regulator, specifically for violations of the Federal Trade Commission Act.

This week, Ashworth settled charges filed by the Federal Trade Commission that the school deceived its students through the way it marketed its online college degree and career-training programs. The FTC alleges some degrees and programs offered by Ashworth failed to meet basic educational requirements set by state licensing boards for careers or jobs such as elementary school teachers, home inspectors, massage practitioners, real estate appraisers and others.

A proposed stipulated court order prohibits Ashworth College from asserting that:

-completing Ashworth’s program will qualify students to obtain vocational licenses without any additional training or experience;

-Ashworth’s programs provide all the training and credentials required to switch careers or obtain a job in a new field;

-there will be job security or steady employment for consumers completing its programs; and that

-course credits are generally recognized by, and accepted, by other postsecondary institutions.

In court papers filed in U.S. District Court for the Northern District of Georgia, the FTC stated that “Consumers have and will continue to suffer substantial injury as a result of (Ashworth’s) violation of the FTC Act.”

"When schools promise students they can transfer course credits or get a better job after completing their programs, they'd better be able to back up those claims," said Jessica Rich, the director of the FTC's bureau of consumer protection. "Ashworth College didn't tell the truth when it made those promises to prospective students."

Why did Ashworth settle with the FTC? For one thing, the settlement has to be approved by the court; the FTC declined to comment on its prospects or what might happen if it wasn’t approved. For another, the court order includes an $11 million judgment against the school—a judgment that was suspended based on the school’s ability to pay it. The upshot? Ashworth is still in business.

“Ashworth College is deeply committed to continuing to offer effective, career-focused programs that enable its students to obtain an affordable education that prepares them whatever their objective, including going from college to career,” said CEO Klapper. He added that the school "emphatically disputes that our practices did not comply with regulations.” To prevent further disputes, he said “we instituted bolder disclosures related to state licensure and credit transferability and we enhanced the training of our enrollment advisors – both the initial training new advisors receive when they join Ashworth, as well as ongoing training they receive regularly.”

While Ashford, also known as the Professional Career Development Institute, eschews student loans, it accepts military benefits—which come from Uncle Sam--including the GI Bill, and has directed some of its advertising to military service members and their families. The FTC’s court papers stated that Ashworth “advertises that a ‘military advisor’” will be available to speak with applicants who a eligible for military benefits.

"Distance-only schools fly under the radar of state licensing bodies, and their abusive behavior, such as targeting veterans with misleading sales pitches, goes unchecked," said Eileen Connor, an attorney in the special litigation unit of the New York Legal Assistance Group. "For example, the New York State Education Department only regulates colleges and schools with physical campuses located within the state. Hopefully, the FTC’s action will send the message to other online education businesses that they are accountable."

More from Personal Finance

Are Starter Homes Still Worth It?

Are Starter Homes Still Worth It?

How to Wire Money Safely, Affordably and Quickly

How to Wire Money Safely, Affordably and Quickly

Should You Take a Mini-Retirement?

Should You Take a Mini-Retirement?

The Most Expensive Places for Families to live in the U.S.

The Most Expensive Places for Families to live in the U.S.

Best Ways to Save for Retirement - Even When You're Living Paycheck to Paycheck

Best Ways to Save for Retirement - Even When You're Living Paycheck to Paycheck