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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.

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Comments

SurfPuppy619 Sept. 30, 2011 @ 11:01 p.m.

Bridgepoint and other schools like it are going to fold once the student loan house of cards caves in.

When only 2-3% of the Bridgepoint students have he ability to pay back their student loans, because the other 98% only have minimum wage jobs and their degree turns out to be worthless, then the jig will be up.

Same with law schools. 75% of students attending the bottom 150 ABA law schools (out of 200) will default on their student loans becuase they will not have the income to pay the loans back. In fact there are several lawsuits against some of the lower rated law schools (including Thomas Jefferson here in San Diego) with good students who cannot get jobs, and never will get jobs because there are no law jobs out there. John Marshall LS in Chicago is now charging close to $5K per CLASS, times that by 30 classes, and this is from a 4th tier POS law school where 90% of the students will never come close to earning the money needed to pay off thst kind of debt.

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Don Bauder Oct. 1, 2011 @ 12:49 p.m.

I have said all along that Bridgepoint is a boiler room, using high-pressure techniques to get students who do not belong in college to enroll. No wonder the dropout rate is staggeringly high. But there is so much money and lobbying clout behind these for-profit colleges that they will continue on until the loan problem gets so frightening that the government will have to act forcefully. Best, Don Bauder

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Visduh Oct. 1, 2011 @ 2:29 p.m.

I picked up on something recently that may partially explain the political cover these for-profit schools enjoy. They are favored by certain veterans groups, especially those who claim to care about the recent, young veterans. Once again, those recently separated folks are having a hard time with jobs and transition to the civilian world. Before I go any farther, let me go on record as saying that I am sympathetic and supportive of them.

The for-profits have positioned themselves as the friend of the veteran, and a source of help in making it in the cold, cruel world. Nothing could be more bogus, really. They take your money, leave you in debt with no education, and you're worse off than before you started. As to why the traditional universities aren't doing a better job with the vets, I have no idea, except to note that they often really don't care much about anything/anybody that isn't on the campus.

If anyone is sufficiently curious, I think you can find some statements made recently by Congressman Hunter, himself an Iraq War veteran, about these for-profits. The gist if his comments was that those schools are helping veterans to get an education they would otherwise be denied. So, the logic goes, to curb the for-profits is to reduce veterans benefits. Anybody care to add to this?

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Don Bauder Oct. 2, 2011 @ 6:08 p.m.

The for-profit colleges are enthusiastically backed by the Wall Street gang wanting to make a fast buck. But, of course, they give a different reason: the for-profits, they claim, are helping the underprivileged. Not when the dropout and student default rates are so staggering, they aren't. Best, Don Bauder

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SurfPuppy619 Oct. 2, 2011 @ 11 p.m.

The gist if his comments was that those schools are helping veterans to get an education they would otherwise be denied. So, the logic goes, to curb the for-profits is to reduce veterans benefits == for every one they claim to help there are 100 they hurt. That is all you need to know.

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Don Bauder Oct. 3, 2011 @ 7:18 a.m.

A lot of this is ideological. For-profit schools' supporters think anything the private sector does is better than what the public sector can do. Best, Don Bauder

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Visduh Oct. 3, 2011 @ 8:19 a.m.

If anyone claims to really believe in the system that we owe to American free enterprise, exceptionalism, and innovation, he/she should want to see for-profit schools succeed. The sad truth is that most of them are not what they claim to be. A true for-profit school should not be relying on government aid and loans for nearly all of its income. The offerings should be sufficiently compelling that folks would be willing and able to open their own wallets and pay their own way. The real issue here is not the for-profit nature of these schools, but the two-faced approach they take in milking federal student aid programs while delivering an illusion of real education. There are many not-for-profit schools that also fail to deliver as promised. The bigger social matter is this current education bubble that brings unprepared and unqualified students into a school setting with promises of a whole new life when they earn some degree or certification. It is an empty promise now more than ever. And outfits like Bridgepoint take advantage of those desperate people.

But I would also ask why there is so much interest in operations such as Bridgepoint when there are junior colleges, state universities, plus thousands of private or church affiliated colleges and universities, all across the land. They should collectively be filling this niche and leaving no opening for the Bridgepoints of the world.

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Don Bauder Oct. 5, 2011 @ 1:44 p.m.

Good points. Bridgepoint says it gets 85% of its earnings from the government. However, it is more like 100%, because the 85% excludes students in the military. Best, Don Bauder

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Twister Oct. 3, 2011 @ 12:57 p.m.

Pardon me if I've missed something, but y'all seem to keep missing Visduh's point--that the "For-Profits" are "filling" a yawning gap in the public university system. And Visduh makes the solution clear: "They should collectively be filling this niche and leaving no opening for the Bridgepoints of the world."

Don, your elitism is showing. ". . . students who do not belong in college . . ." (By dbauder 12:49 p.m., Oct 1, 2011)

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Visduh Oct. 3, 2011 @ 7:41 p.m.

Thanks, Twister, for restating and reiterating my comments.

My intentions were not to provoke a fight with Don. I was attempting to illustrate the idea that there could be a role for the for-profit schools. But I wasn't saying that Bridgepoint and a host of other such operations were not abusing federal student loan programs and failing to deliver. I just don't want the notion that a school is for-profit to be pejorative. The private sector has made us what we are as a nation, and there's no really good reason that it cannot educate too. Sadly, Bridgepoint and its kindred operations are just sucking the public teat for big and undeserved profits.

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Don Bauder Oct. 5, 2011 @ 1:47 p.m.

In theory, for-profit colleges could be responsible. But.... Best, Don Baider

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Don Bauder Oct. 5, 2011 @ 1:45 p.m.

State-supported universities have plenty of students who do not belong in college. Best, Don Bauder

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Visduh Oct. 5, 2011 @ 7:34 p.m.

Society as a whole may be at fault. There is a long-standing belief that more education is better, therefore if anyone wants more education he/she must be encouraged. I think that ethic exists only in the US today. European nations are well-educated, but not everyone is selected for higher education, and the weeding out process starts in the early teen years. Here, we keep the door open to all comers for life. And then we get the Bridgepoints of the world telling the unprepared/unready that they too can get a degree. "Just give us your money!"

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Don Bauder Oct. 5, 2011 @ 8:57 p.m.

Good analysis, Visduh. Best, Don Bauder

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SurfPuppy619 Oct. 5, 2011 @ 8:09 p.m.

State-supported universities have plenty of students who do not belong in college. Best, Don Bauder

== The graduation rate at SDSU was 25% when I went there-that is pretty shocking ot me.

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Visduh Oct. 5, 2011 @ 8:34 p.m.

That graduation rate sounds low. But what I do have is some personal insight into the length of time it takes the typical SDSU student to complete a "four year" degree. It exceeds six years, and has for a very long time. That makes me wonder about the caliber of the student accepted by SDSU (and presumably many of the other CSU campuses) and the motivation that student has. Yet we are told that the CSU system accepts from the top third of high school grads. What on earth happens to the other two thirds? Ans: Bridgepoint and its brethren.

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Don Bauder Oct. 5, 2011 @ 9 p.m.

You have that right. Incidentally, stock of Bridgepoint leapt something like 10% today. Some analyst had a bullish report on the for-profits, and they all took off. The day before, North Carolina announced it was taking a look at Bridgepoint's Ashford. That was not a deterrent to market speculators. Best, Don Bauder

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SurfPuppy619 Oct. 11, 2011 @ 2:47 p.m.

But what I do have is some personal insight into the length of time it takes the typical SDSU student to complete a "four year" degree. It exceeds six years, and has for a very long time == On eof the major reasons it takes 6 years to finish a degree at State is that the school does not offer enough classes. It was common for people to have to wait 1-2 years to get a specific class. Don't know if that holds true to day, but it did 25 years ago.

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Don Bauder Oct. 5, 2011 @ 8:58 p.m.

Wow. That sounds low to me, but I simply don't know. Best, Don Bauder

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Twister Oct. 11, 2011 @ 2:19 p.m.

Don et al:

Does anyone know how to assess the quality of universities and colleges? I found this site; does anyone know if it's legit? http://www.consumerfraudreporting.org/Education_Degree_ Scams_Unaccreddited.php

(To use the link, delete the return that I used to fit the preview space.)

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