On July 25, stock of San Diego-based, deeply-troubled Bridgepoint Education closed at $8.09. It had been as low as $5.31 in the past 52 weeks. Today (August 3), Bridgdepoint closed at $13.10 — a huge ride in one week.
What explains this gigantic goose? For one thing, the for-profit university reported a good quarterly income gain July 26, even though revenue declined. Enrollment registered a small gain, the first in seven quarters.The stock was up more than 40 percent after the earnings were released.
But there could have been another factor. The New York Times revealed that Betsy DeVos, head of the Department of Education, announced that the administration would revoke a rule that has been hurting for-profit colleges. Under the Obama administration, for-profit colleges had to prove that its graduates were able to get gainful employment. This requirement hurt the for-profit education companies, because few can show that their graduates get enough remuneration to pay off their government-guaranteed student loans.
DeVos has been chipping away at other regulations put in place during the Obama years. The restrictions were considered necessary because the for-profits charge much more than non-profit universities, have an inordinately high percentage of total student loans, have a high default rate on those loans and high dropout rate, and then students who graduate have trouble getting remunerative work.
Bridgepoint’s Ashford University, which accounts for most of the company’s income, had default rates around 15 percent in 2012 through 2014, according to Bridgepoint’s report to the Securities and Exchange Commission for the quarter ended June 30. The document reveals that Bridgepoint has settled a dispute with the California Franchise Tax Board but is still undergoing an audit from the Internal Revenue Service, and battling with the Veterans Administration over government loans.