DES MOINES, Iowa — A for-profit university led by former University of Maine Chancellor Richard Pattenaude has agreed to a $7.25 million settlement with the Iowa attorney general, who accused the school of using false and misleading tactics to entice students to enroll in online classes.

Thousands of Iowa students could be eligible for refunds from Ashford University’s online school. Ashford is based in San Diego, California, and has a campus in Iowa in addition to its online programs.

Iowa Attorney General Tom Miller said at a news conference Friday that Ashford and its San Diego-based parent company, Bridgepoint Education Inc., have agreed to a $7.25 million settlement that requires them to change certain recruitment and enrollment practices that Miller claims ran afoul of Iowa’s anti-fraud act.

He estimated that up to 5,000 Iowans who enrolled in online classes offered by the for-profit university could benefit from the settlement, which does not apply to Ashford’s “on-ground” facility in Clinton.

Bridgepoint and Ashford did not admit any wrongdoing and defended the school in a statement released after Miller’s news conference.

COMPLAINTS LED TO INVESTIGATION

“Clearly, Ashford is and always has been committed to student success,” Pattenaude, president of Ashford University, said in the statement. “Ashford University is proud of its high quality, affordable education and will continue to remain dedicated to long term student outcomes.”

Pattenaude was the president of the University of Southern Maine for 16 years before becoming the chancellor of the University of Maine System in 2007. He stepped down from that job in 2012 and became president of Ashford. By the time Pattenaude became president, complaints about Ashford had already led the Iowa attorney general to launch his investigation.

Under the settlement reached Friday, Ashford and Bridgepoint agree to make major changes in their practices nationwide and to submit to independent oversight.

The company also must pay $7.25 million to the state. Miller anticipated that $7 million would help reimburse former and current Ashford online students from Iowa, and $250,000 will go toward administering the reimbursement program. An undetermined number of Iowa’s Ashford online students will qualify for some level of reimbursement, which will be announced later, he said.

Under the agreement, Ashford will require all incoming associate and bachelor’s degree candidates with no previous college credits to participate in a free two-week online orientation program. Ashford also agrees to allow students to withdraw from their first course, at no cost, within the first three weeks.

The settlement caps a three-year investigation into complaints filed by current and former Ashford students that the online school’s conduct resulted in students not completing their educational programs and not obtaining professional licenses but becoming saddled with substantial student loan debt.

“I was clearly ripped off,” said Patrick Kean, a Navy veteran who took education classes through Ashford for two years. “I don’t think there’s any other way to describe it. When you come out with nothing but a piece of paper for $30,000, it’s not a good deal.”

‘TROUBLING CONDUCT’ BY RECRUITERS

Kean said Ashford officials did not tell him his education degree would not qualify him to teach in any state. He said he also found out after the fact that his credits would not transfer to any Iowa school, not even Ashford’s own university in Clinton.

Miller said Kean’s case was an example of how the online school’s marketers misrepresented to prospective students who wished to become teachers. They said an online Ashford education degree would allow them to become classroom teachers when, in fact, many Ashford graduates are subject to additional requirements that may require additional time, more coursework or additional money.

“Our investigation found what we allege was troubling conduct by Ashford recruiters, including misleading prospective students to encourage them to sign on the dotted line,” Miller said.

“Unfortunately for many Ashford students, they didn’t get the degree they hoped for or the job they were led to believe they’d get after graduating,” he said. “What they did end up with was a crushing amount of student loan debt.”

In its statement, Ashford specifically denied that its recruiters employed those tactics.

“Furthermore, for the past four years, Ashford student satisfaction surveys have shown that 93 percent of those students surveyed would recommend Ashford University to a friend or family member,” the statement says.

As part of the agreement, Bridgepoint agrees to submit to an independent settlement administrator who will oversee its compliance for three years. Bridgepoint also must provide ongoing nationwide training for its recruiters, admissions counselors and academic advisers to ensure they comply with the settlement.