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Dive Brief:
- The U.S. Department of Education has dropped a requirement that Ashford University post a letter of credit in order to continue receiving federal student aid after it separates from its owner, Zovio, according to an SEC filing Tuesday.
- The letter of credit would have been equivalent to 25% of the for-profit, online institution’s 2018 Title IV income, or around $103 million, and due within 10 days of the transaction’s close.
- Zovio said in its filing that the department lifted the requirement because of a change in the separation agreement’s legal structure.
Dive Insight:
Previously, the LLC that currently owns and operates Ashford University was expected to merge into AU NFP, a nonprofit entity set up to run the school. Last fall, Zovio announced that the department had approved the arrangement in a preliminary review of the transaction, with the letter of credit as a contingency.
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