The University of Arizona Global Campus told students Friday it has temporarily lost access to education benefits covered by the GI Bill, which could spell enrollment troubles if it doesn't soon regain approval.
The loss of military education benefits could deal a bruising blow to the online college, where nearly 10% of the institution's roughly 28,000 students receive financial aid from Veterans Affairs, according to a snapshot of the university's student demographics shared in February. The university draws a sizable share of its revenue from VA benefits, with 3,422 of the university's students receiving a total of $16.5 million from the GI Bill in fiscal 2020.
"This is sort of a stunning development that's going to have an enormous impact," said Phil Hill, a partner at ed tech consultancy MindWires. "They're already dealing with big enrollment drops, so add this on top, it's going to cause chaos."
UAGC told affected students Friday that they will experience a delay or gap in their VA education benefits starting Tuesday, including a loss of their monthly housing allowances. The university is automatically offering grants to cover course costs and fees for students whose benefits are interrupted, though it will not cover housing allowances.
The university told students it is working with the VA and other federal and state agencies to resolve the issue. In an emailed statement, the university said the loss was due to a timing issue between agencies in two states. UAGC recently moved its headquarters from California, which pulled its blessing for the college to receive VA benefits because of the relocation. It moved its headquarters to Arizona, which has yet to sign off on the institution receiving VA benefits.
"Throughout the lengthy regulatory process required to move UAGC from California to Arizona, UAGC has had one stated goal — avoid any disruption of benefits for our eligible students and their dependents," UAGC President Paul Pastorek said in a statement. "Since the end of 2021, we have followed the rules and instructions we were given and worked continuously to meet all requests and obligations on time. We will do everything in our power to keep students in the classroom as we await the formal approval in Arizona."
How are students affected?
Rafferty Vaughan is a GI Bill recipient and UAGC student close to finishing a bachelor's in information technology. He said he wants the university to provide more information about how fast it will be able to get approval to resume access to VA benefits and how long it plans to give students grants to make up for the loss.
"I'm 15 credits away from completion of my degree, I don't really want to transfer schools at this point," Vaughan said.
Higher education experts said the development could lead to an exodus of students from the university, which has already been struggling with enrollment in recent years.
The situation could affect students' college funding beyond tuition. If the university does not regain access to VA education benefits soon, some students may also end up losing their housing allowances.
Still, it's possible that most students have already had their housing allowances dispersed this month, giving them a buffer, said William Hubbard, vice president for veterans and military policy at Veterans Education Success, an advocacy organization.
"But if the school continues to remain ineligible for VA benefits and the next month rolls around, I mean, there's no rent," he said. "That's really the worst-case scenario in the immediate term."
The loss of that housing allowance will likely leave student veterans concerned about how those costs will be covered, said Vanessa Sansone, a higher education professor at the University of Texas at San Antonio.
And it could be difficult to help students who need to finish their education elsewhere to transfer to different institutions.
"This is a global campus," Sansone said. "I'm not sure where these students are living — they might be all over the world for all we know."
Could the loss become permanent?
Losing GI Bill access, even temporarily, creates yet another issue for UAGC, which was formerly known as Ashford University.
In December 2020, the University of Arizona purchased the for-profit college from Zovio, a company that now provides marketing, recruitment and other services to the online school in exchange for a portion of its tuition revenue.
The move was intended to strengthen the public flagship university's presence online and with working adult students. But critics have worried that acquiring the online college — which has faced accusations of poor outcomes and misleading students — would damage the University of Arizona's reputation.
UAGC said it received a notice from a California state agency last week that its programs were no longer approved for VA benefits because its headquarters had moved to Arizona. UAGC submitted an application for VA approval in September with the Arizona State Approving Agency, but that agency said it lacked jurisdiction over the institution because it had a California license, according to a university statement.
The university then worked with a California state agency to close UAGC's California location to move forward with the Arizona approval.
The university stressed that it has followed "all procedures as directed" by both agencies when coordinating the change in jurisdictions. "Despite providing all required information at every step of the process, we are nevertheless experiencing a temporary lapse," UAGC said in a statement. "This is an unacceptable situation for our students."
The Arizona State Approving Agency said in an emailed statement that it takes about 30 days to approve or deny an application "once there is enough information to make an actionable decision."
"We understand that many are waiting for our decision," the agency wrote. "Our ultimate responsibility is to serve and take care of military-affiliated students. We do that by doing our due diligence and ensuring schools meet all the standards required per the U.S. code and all applicable regulations."
The loss of VA benefits is just the latest strike against the online college, whose reputation has been battered by outspoken critics and a recent court ruling against the institution's former owner. Last month, a California court fined Zovio $22.4 million in civil penalties for misleading students about the cost and career outcomes of the institution's programs.
While the judge did not find substantial evidence that the misrepresentations continued past 2017, critics point out that UAGC still has close ties to its former parent company, which provides a host of services to the institution through a 15-year contract.
State agencies act as gatekeepers to GI Bill funds, but the VA has ultimate authority, said Hubbard, of Veterans Education Success.
In a letter sent Friday, Veterans Education Success President Carrie Wofford called on the VA to "clearly state that it will not entertain any other state approving agency's request to resume approval of UAGC programs."
Wofford cited federal law that requires VA to take action against institutions that make substantial misrepresentations, including whether programs will lead to certain licensures and how much they cost. The recent California ruling found UAGC had made both types of misrepresentations to students.
"It sounds like the school feels fairly confident that they're going to get this taken care of," Hubbard said. "I have less confidence."