Dave Rice 12:38 p.m., May 21
U.S. May Crack Down; Bridgepoint Stock Plunges
Stock of Bridgepoint Education plummeted 7.92% today (Sept. 30) to $17.44. The stock closed at $20.38 as recently as Tuesday. The government is making noises about reforming for-profit educational institutions.
Yesterday, the Department of Education's Office of Inspector General identified "serious vulnerability" in distance programs because of fraud committed by students, according to Reuters. The department recommended stricter enrollment processes for colleges. Ninety-nine percent of Bridgepoint students attend online. An astonishing 84% of two-year students drop out and 63% of four-year students quit. Today, a bill was introduced in the House to cut down Pell Grants. Bridgepoint lives off government aid and loans.
Warning: the Department of Education has tried to reform the for-profits before, but heavy lobbying and right-wing politicians have thwarted such moves. At one point, Bridgepoint had the highest short position of any stock; when the Department of Education's recommendations were watered down, the shorts ran to cover and Bridgepoint stock soared.