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Bridgepoint Aid Grew as Students Dropped Out,
Harkin Says
By John Lauerman
Mar 10, 2011

Bridgepoint Education Inc. (BPI), the owner of Ashford University,
pulled in millions of dollars in federal funds as student dropout
rates soared,
U.S. Senator Tom Harkin said today at a hearing on the for-
profit college.

Almost two-thirds of students who enrolled in Clinton, Iowa-based Ashford
in 2008-2009 dropped out by September 2010, Harkin, a Democrat from
Iowa, said.
Bridgepoint took in more than $600 million in federal
student aid in 2010,
he said in the hearing.

“In the world of for-profit higher education, spectacular business success is
possible despite an equally spectacular record of student failure,” Harkin
said at the hearing today.

Bridgepoint, based in San Diego, was one of many for-profit colleges
that bought small, financially troubled colleges with regional accreditation,
and expanded enrollment with telephone student recruitment and online
educational programs.

While enrollment at for-profit colleges tripled to 1.8 million over the past
decade, accreditors were unprepared to ensure that students were being
served appropriately, Jose Cruz, vice president for higher education policy
and practice for the Education Trust, a research and advocacy group, said
in prepared testimony.

‘Intending to Exploit’

“Who could have foreseen, 20 years ago, that a group of investors would
purchase small, well-established, fully accredited, but financially troubled
postsecondary institutions, intending to exploit their history and physical
presence to build billion-dollar, publicly traded, for-profit college
companies?” he said in testimony prepared for the hearing. “Yet that is
precisely what has happened in the case of Bridgepoint.”

Bridgepoint Chief Executive Officer Andrew Clark, who was invited to
appear at the hearing, declined to testify. The company fell 51 cents, or
2.8 percent, to $17.49 at 4 p.m. in New York Stock Exchange composite
trading. The Bloomberg U.S. For-Profit Education Index of 13 companies
dropped 1.9 percent.

After it was purchased by Bridgepoint in 2005, state regulators found that
an Ashford master’s program in teaching was understaffed and poorly
structured, said Arlie Willems, a former consultant to the Iowa Department
of Education. Faculty members lacked credentials and qualifications and
there were few opportunities to practice in classrooms, Willems said.

Teachers’ Complaints

Teachers who took courses at Bridgepoint repeatedly complained that
their classes at Ashford didn’t fulfill state requirements for licensure,
according to documents Harkin released at the hearing. In most cases,
Ashford officials denied the existence of a problem or defended the current
practice, Willems said.

For-profit colleges present “a specific threat to the future of our teaching
force because of their priorities: bottom-line profits over quality education,”
Willems said in the hearing.

While about two-thirds of Ashford students withdrew before graduating,
recruiters helped enrollment grow to 77,892 in 2010, from 1,083 in 2005,
Harkin said in the hearing. Meanwhile, annual instruction costs fell to $700
per student in 2009, from $5,034 per student in 2004, before the
Bridgepoint purchase, Harkin said. The percentage of students defaulting
on government loans within three years of the beginning of required
repayment rose to 22 percent in 2008 from 8.8 percent in 2005, he said.

Students’ use of federal aid soared to $613 million in 2009-2010 from less
than $3 million in the 2004-2005 school year, Education Department
Inspector General Kathleen Tighe said in prepared remarks. The increase
in aid after Bridgepoint’s purchase of Ashford prompted an audit, and the
final version was released in January.
‘Significant Deficiencies’

The audit found “significant deficiencies” in Bridgepoint’s recruitment and
use of student aid. While federal regulations forbid paying recruiters based
on the number of students signed up, with some exceptions, Bridgepoint’s
compensation for recruiters was “highly incentivized,” Tighe said.

In some cases, Bridgepoint kept more of students’ financial aid money than
was needed for tuition, Tighe said. The company also failed to adequately
show that students were participating in online classes, according to the

Ashford officials disagreed with many of the audit’s findings, and the
Education Department must determine how to address them, Tighe said.

The hearing on Bridgepoint is premature while the Education Department
is still determining how to deal with the company, said Republican Senator
Mike Enzi of Wyoming.
‘Rush to Judgment’

“This hearing is an agenda-driven rush to judgment,” Enzi said in the
hearing. “It’s a cart before the horse, a verdict before the trial.

“The Inspector General’s findings trouble me as much as they do you,”
Enzi said. “These are potentially serious violations of the law. A process is
in place to review these findings without intervention from Congress.”

The Education Department has said it would have had no concerns about
representatives of Bridgepoint testifying at the hearing, Harkin said.

Throughout these years of growth and disputes with regulators, Ashford
has remained accredited, Cruz said.

“It must make us wonder about the quality of those reviews -- and the
ability of the entity leading them to understand all of the complexities
presented by a for-profit institution,” Cruz said.

The Higher Learning Commission’s North Central Association of Colleges
and Schools is making “major” changes to stop companies from buying
colleges solely to get accreditation and access to federal student aid, said
Sylvia Manning, president of the group. The commission is now attaching
conditions to the sale of colleges, requiring them to “remain essentially the
same institution” to keep their accreditation, she said.

First-time applications for accreditation take a minimum of two years and
have become more rigorous, Manning said. Colleges also are required to
disclose more to students about program costs and quality, she said.

“We were behind the curve,” Manning said. “We had catch- up to do. We
have done catch-up.”

Bridgepoint and the Feds
Voice of San Diego
March 24, 2011
by Liam Dillon

Our story on new San Diego for-profit education powerhouse Bridgepoint
Education focused primarily on a consumer protection angle. Policymakers
and regulators are concerned that if the school has such a high dropout
rate and high profits, the federal financial aid debt Bridgepoint's students
are taking on is going to investors rather than providing a good education.

But there's another concern, too. If Bridgepoint students are unable to
repay their federal loans, it leaves the government on the hook.

And Bridgepoint students aren't keeping up with their loans as well as
students at other schools, U.S. Department of Education data shows.

At Ashford University, Bridgepoint's primary college, 21.7 percent of
students defaulted on their loans within three years, according to the
department's most recent statistics. The national average is 13.7 percent.

"Those numbers are definitely high," said José Cruz, vice president for
higher education policy at Washington D.C.-based nonprofit Education
Trust. Cruz testified on the impact of for-profit education on low-income
and minority students at a U.S. Senate committee hearing held earlier this
month by Iowa Democrat Tom Harkin about Bridgepoint.

Federal loan defaults don't just hurt the government. They have a
devastating effect on students because they're not dischargeable through

Further, students who drop out don't even have a degree to show for their

Bridgepoint has responded to concerns about its default rates by saying
that the company targets large segments of the population that wouldn't
otherwise go to college. Those groups demographically overlap with those
that are at a higher risk for default, Bridgepoint adds, and accounting for
those differences puts the school in line with more traditional colleges.
Further, the company argues, it has created new initiatives to improve
student payment percentages.

Also, Bridgepoint's student default rates are below the average for for-
profit schools, according to the most recent Department of Education data.
And, under current regulations, the rates aren't anywhere near levels that
could result in the department pulling Bridgepoint's access to federal loans.

But what's drawn the attention of policymakers to Bridgepoint, Cruz said, is
how these numbers look against the backdrop of the company's booming
student population. As we noted in our story, enrollment has spiked 517
percent since 2007 to almost 78,000 students.

That means that even if the school's student default rates hold steady,
more people are failing to pay.

Student loans aren't the only federal support that contributes to
Bridgepoint's bottom line. The government provides grants targeted to low-
and middle-income students, called Pell Grants. According to Department
of Education statistics, students studying at Ashford received $172 million
in federal grants in 2010 compared to $3.8 million four years prior.
For-profit education
companies (blog posts)
Charter schools blog posts
CEO of Bridgepoint
2009 salary of $20,532,304
(618 times the nation's median
work's pay)

AFL-CIO's database

According to the Federal
Reserve, U.S. corporations
held a record $1.93 trillion in
cash on their balance sheets in
2010. But they are not
investing to expand their
companies, grow the real
economy or create good
middle-class jobs. Corporate
CEOs are literally hoarding
their company’s cash—except
when it comes to their own

In 2010, Standard & Poor's
500 Index company CEOs
received, on average, $11.4
million in total compensation—
a 23 percent increase in one
year.[1] Based on 299
companies’ most recent pay
data for 2010, their combined
total CEO pay of $3.4 billion
could support 102,325 median
workers’ jobs.[2]

Fortunately, the 2010 Dodd-
Frank Wall Street Reform and
Consumer Protection Act
contains new tools to help limit
runaway CEO pay.  
Shareholders now have a “say-
on-pay” vote on executive
compensation, and companies
must disclose the ratio of CEO-
to-worker pay at each
Bridgepoint Continues to Boom
May 4, 2011
by Liam Dillon
Voice of San Diego

Big news yesterday for Bridgepoint Education, the San Diego-based,
for-profit higher education company that has burst into the local economy
and faced the ire of federal regulators.

The company's first quarter earnings grew 81 percent, far surpassing
analysts' expectations. Its stock jumped 8 percent to $19.87 at the close of
trading yesterday. Enrollment at Bridgepoint's schools, Ashford University
in Iowa and University of the Rockies in Colorado, also rose 34 percent to

Stories on Bridgepoint yesterday said the company's continued growth
came at a time when many other for-profit colleges are bowing to federal
scrutiny about enrollment practices. From Dow Jones Newswires:

Bridgepoint is one of the few for-profit school operators that hasn't reported
declines in new-student enrollments. Many institutions are overhauling
recruiting and tightening admissions standards in the face of new
regulations aimed at ensuring students are being properly educated.

Yesterday was Bridgepoint's biggest one-day gain since November.

Our reporting on Bridgepoint in March focused on the company's
astounding rise from startup to major private employer and its increasing
influence in local philanthropy and politics.

Its political muscle continues to grow locally, too. Campaign finance reports
released this week show that
Bridgepoint gave $16,000 to the
proposed ballot measure to give most new city workers 401(k)s
instead of pensions.