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Stock of for-profit Bridgepoint Education is down 22.3% to $16.70 this morning (July 9) after the company revealed its Ashford University -- which accounts for almost all of its revenue -- has been denied accreditation by the Western Association of Schools and Colleges. Bridgepoint has been a favorite target of those in Congress who want to reform the ethically challenged for-profit college sector. Bridgepoint spends a fat percentage of its funds on recruiting students for high-priced online education that leads to few jobs, as Sen. Tom Harkin of Iowa has pointed out for years in several reports. The company's dropout rate is amazingly high, as Harkin has frequently reported. The company has been a darling of Wall Street -- and of the San Diego establishment -- because of high profits and, locally, generous spending on events such as the Holiday Bowl.

According to Inside Higher Ed, "Ashford remains accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools, but it had sought accreditation in the West -- where Bridgepoint is headquartered -- in part because of the Higher Learning Commission's increasingly chilly treatment for non-profit institutions."

Forbes Magazine said this morning, "Ashford is in danger of losing its remaining accreditation" from the Higher Learning Commission. Without accreditation, the company could lose access to federal aid, points out CBS News. Without federal money, the company would have little left.

Bridgepoint says it will appeal Western's decision and reapply for accreditation. The Western Association is supposed to come out with a statement later today. Meanwhile, the company faces pressure from the federal Department of Education, which wants to clean up much of the for-profit college industry, but faces opposition in Congress from Republicans. Bridgepoint gets more than 85% of its revenue from the federal government's grants and loans to students.

Bridgepoint has been a pingpong ball in the stock market. It has usually had a huge short position, or investors betting that the stock will go down because of the ethical problems that have been well known. But when a company's short position gets exceedingly high, any good news can force the shorts to buy the stock, or cover their shorts, thus sending the shares skyward. This has happened to Bridgepoint more than once.

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Comments

DavidnPB July 9, 2012 @ 9:14 a.m.

UNC is running a great print ad for its on-line [and excellent] graduate School of Business.

It reads " The best on-line University that probably won't admit you."

UNC is actually selective in its admissions, and pays its Faculty more than their admissions people.

What a concept.

Bridgepoint is a Dutch Tulip. It will be filing for its BK in 30 days.

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Don Bauder July 9, 2012 @ 10:31 a.m.

Online education can work when controls are in place. But that requires that the institution be committed to education. Bridgepoint is interested in boosting profits and not, unfortunately, in quality education. Its high-pressure recruiters outnumber its counselors by a huge amount. Its dropout rate is horrendous; the few that graduate can't get jobs, for the most part; Bridgepoint's fees are very high. Students pay a bundle and get little if anything for their money. You, the U.S. taxpayer, are paying for this through Pell grants, federal loans, and the like. This has all been revealed in Congressional studies. If Bridgepoint loses its federal funding, it will surely go bankrupt. But the company has a lot of politicians in its pocket. Best, Don Bauder

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Don Bauder July 9, 2012 @ 4:01 p.m.

ACCREDITING COMMISSION REVEALS SHOCKING DETAILS. The Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools & Colleges posted on its website today (July 9) its findings in the denial of initial accreditation to Ashford University, which constitutes most of San Diego Bridgepoint Education. Some of the revelations were stunning, even for those who have followed Bridgepoint for years.

The commission complained of poor student retention, inadequate alignment of resource allocation with educational sources, insufficient full-time faculty, and other deficiencies. Over five years, 128,000 Ashford students withdrew as 240,000 new students enrolled. "This level of attrition is, on its face, not acceptable," said the commission.

"Spending on student recruitment constitutes over 31% of Ashford spending, well above spending for instructional costs and services" including administration of financial aid, student services and academic support, said the report.

The commission found that a core of about 50 full-time faculty members, most of whom were recently hired, served more than 90,000 online students. This is "not sufficient to provide leadership and oversight," said the commission.

The commission had warned Ashford of its concerns in May and June of last year. I haven't yet checked whether Ashford's parent Bridepoint Education alerted investors of these deficiencies at that time.

Bridgepoint stock plunged 33.72% on the day, winding up at $14.25.

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Dennis July 10, 2012 @ 9:40 a.m.

Another fine example of corporate welfare. The private sector & republicans love to say that government spending doesn't help the economy but they are the first to line up for the money. That might not be a bad thing if they actually produced something with the funds.

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Don Bauder July 10, 2012 @ 1:42 p.m.

You are correct. These so-called pro-free enterprise, rugged individualist, purported conservatives claim they want no government interference in business until they want a handout. Actually, corporate welfare costs taxpayers more money than social welfare does. Bridgepoint and most other for-profit universities are quintessential examples of corporations sucking the government teat dry, while their supporters (Republicans, in the main) wail about government waste. Best, Don Bauder

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SurfPuppy619 July 10, 2012 @ 2:35 p.m.

It is BOTH parties, and yes, the republicans had a large part of this scam under GW, but the scam has been going on for 25 years, where the top gov officials and the so called schools have been selling basically college credit and/or degrees that are not worth the paper they are printed on, like Ashford, all to scam the student loan dollars.

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Don Bauder July 10, 2012 @ 5:39 p.m.

Yes, it is both parties. Democrats preach that more people should get college degrees, and Republicans want them to go to for-profit colleges on the false supposition that the private sector can do everything better than the public sector. Education is one thing that the private sector CANNOT do better. The corrupt for-profit universities are proof of that. Best, Don Bauder

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Don Bauder July 10, 2012 @ 1:52 p.m.

BRIDGEPOINT STOCK PLUNGES AGAIN. Stock of Bridgepoint Education plunged 8.28% to $13.07 today (July 10) following yesterday's 34% tumble after news that its Ashford University could not get accreditation from the Western Association of Schools and Colleges. Both yesterday and today, several analysts lowered their recommendation on Bridgepoint stock, which is a little like closing the barn door after the horse has escaped. Some bullish analysts say it may be time to buy. The stock has had quite a fast correction. However, the worry is that Ashford could also lose its accreditation from the Higher Learning Commission of the North Central Association of Colleges and Schools, which now accredits it. If that happened in a couple of years, Bridgepoint with no accreditation would lose its source of funds, the federal government, and would essentially be out of business. Best, Don Bauder

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Burwell July 10, 2012 @ 8:26 p.m.

Bridgepoint does not have a viable business model at this point. WASC insists that Bridgepoint must decrease the percentage of "tuition" spent on marketing and increase the percentage allocable to education. Bridgepoint must also substantially decrease the drop out rate. In order to accomplish this Bridgepoint must reject unqualified applicants and cut spending on marketing. Bridgepoint will have fewer students and income and earnings will drop. BPI appears to worth no more that $6 a share at this point given the uncertainties.

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Don Bauder July 10, 2012 @ 8:54 p.m.

Very shrewd analysis. One alternative: the company could keep its accreditation from the North Central Association of Colleges and Schools, although that body is cocking an eyebrow at the for-profits. If Bridgepoint gave up on WASC, which is likely, as you point out, it could put more of its concentration near that tiny school in Iowa which it purchased to get accreditation in the first place. But, as you point out, such a strategy would mean fewer students, lower income, lower profits. WASC's complaints about Ashford are pretty severe; I don't see how Ashford can meet WASC's demands. WASC wants quality education and Ashford (which is nearly all of Bridgepoint) isn't even close to providing such a thing. Let's face it: Bridgepoint is more of a boiler room than an educational institution, and regulators and accrediting bodies know it. Best, Don Bauder

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SurfPuppy619 July 11, 2012 @ 1:06 a.m.

Let's face it: Bridgepoint is more of a boiler room than an educational institution, and regulators and accrediting bodies know it. Best, Don Bauder

Yet gov allows it.

Like the gov allowed MF Global to steal $1.6 billion of investor money and no one is in the joint, no one has been charged, no one is even under investigation-banana republic we are

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Don Bauder July 11, 2012 @ 7:28 a.m.

We aren't the only banana republic. It appears that the Bank of England knew that the Libor rate was being manipulated by the major banks. On our side of the pond, our Federal Reserve had questions about it and apparently did nothing. Municipal bond bids have been manipulated in the U.S. for years, draining states and municipalities of much-needed funds. I am hoping that before the election, the people are told how corrupt Wall Street is -- told in understandable terms. Romney's Swiss, Caymans, and Bermuda antics must be in the news every day until the election. You don't stash money in offshore banks unless you are hiding something. I suspect that Bain's use of the Caymans was designed to get around disclosure requirements in the U.S. The Swiss bank caper sounds like tax evasion, but that is not certain. Best, Don Bauder

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Visduh July 13, 2012 @ 6:33 a.m.

As a skeptic of the effectiveness and role of accrediting agencies in general, I never woulda thunk it. The WASC has every reason in the world to refuse accreditation to this operation, along with more than a few others that seem to squeeze by with probationary status. Moreover, I thought that Bridgepoint would have been sufficiently clever to pull the wool over the eyes of the WASC and continue the scam. We can be sure that WASC will be sued by Bridgepoint, and had better lawyer up fast. I don't think that corner of academia has had to defend its decisions--largely because it seldom denies accreditation--in the courts. Oh, this will get ugly before it ends.

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Don Bauder July 13, 2012 @ 7:07 a.m.

Yes, it may get ugly, Visduh, and maybe it is time that the accrediting agencies were examined closely. It seems to me that a lot of schools get undeserved accreditation. WASC deserves applause for its Ashford (Bridgepoint) move. Best, Don Bauder

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dwbat July 13, 2012 @ 10:18 p.m.

And the stock dropped significantly again today. Soon they may be selling Bridgepoint shares at Big Lots!

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SurfPuppy619 July 13, 2012 @ 1:19 p.m.

Visduh, the entire upper levels of the DoE, and WASC, are appointees, by the President, who appoints student loan industry yes men and yahoo's, so the lenders are going to get whatever they want. SL's today are no different than "debtors prisons" of last century.

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Don Bauder July 13, 2012 @ 1:53 p.m.

And former mortgage peddlers go to work for for-profit colleges as recruiters. Best, Don Bauder

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jham88 July 17, 2012 @ 11:33 a.m.

Does anybody know if Congressman Bilbray has supported the Bridgepoint Scam? I wrote him over a year ago expressing my serious concern about Bridgepoint being successful with our tax dollars propping up its profits. His office wrote back a pros and cons summation of what the proponents and critics say about the for profit higher education industry. The letter seemed to be carefully keeping its distance yet also trying to support the argument for a For Profti Business Model.

Anybody?

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