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Sen. Tom Harkin, D-Iowa, has been holding hearings on the abuses of for-profit colleges, which have only 10% of university-level students but account for 44% of loan defaults. Harkin's research team is called the HELP committee. In a recent appearance on the Senate floor, Harkin cited stunning numbers from San Diego's Bridgepoint Education and its Ashford University, in which the overwhelming number of its students are enrolled. Harkin talked about two-year associate's degree programs. "In the first year, 84.4% of students from Bridgepoint who signed up dropped out," said Harkin. "What do you think happened to their [federal] loans? What do you think happened to their Pell grants? Students get those back? Not on your life. Bridgepoint kept them, the money went to their shareholders," said Harkin, noting that 63% of those seeking a bachelor's degree at Ashford drop out within a year.

Then came another shocker: "While Bridgepoint employs 1,703 recruiters, they employ just one person to handle career planning...for the entire student body of 67,000 students," said Harkin, who is pressuring the Department of Education to push for reforms. Bridgepoint is under investigation of the department.

Comments
37

Bridgepoint and all other for profit and non profit schools that have default rates above 20%- OVER THE ENTIRE COURSE OF A STUDENT LOAN- not just the two year bogus defautl rate the gov uses, should be banned from student loan program.

Dec. 29, 2010

The government is trying to set up measurements for these for-profit colleges, which are often simply called boiler rooms. The default rate should be one of those measurements. The same should be true for accreditation. The process should take the default rate into account. Best, Don Bauder

Dec. 30, 2010

classis government term.

if it were a private business "setting up measurements" it would be done in short order.

Dec. 30, 2010

Of course, the for-profit colleges are private businesses. They have their own internal measurements of how they are doing. Their salespeople have to enroll X number of students a month or risk getting fired, for example. That costs the taxpayer, which supplies up to 90% of these schools' funding. The fedeal government is trying to set up success measurements, such as how many graduates got jobs after being in the workforce. Best, Don Bauder

Dec. 30, 2010

If Bridgepoint were selling cars, that rate of failure would be a huge scandal, and it would be out of business. Toyota has a few dozen (or hundred, or thousand--let's not quibble) documented cases of cars going out of control, and it is costing them billions in damages, loss of reputation, reduced sales and reduced profit margin.

These stats for Bridgepoint speak for themselves. Even if they were only a tenth as bad as reported, they would still be unacceptable. But we must never question anything that has to do with education, especially if it involves education for the otherwise neglected groups. And so, this pack of grifters sells a bill of goods to thousands of unwitting victims, 85% of whom see the futility of it all within the first year, and bail out. It will be interesting to see how the defenders of Bridgepoint, those who post comments to these blogs, can deal with this dismal picture. Very interesting. Let's hear from you guys.

Dec. 29, 2010

Yes, let's hear from more defenders of Bridgepoint. And let's ask them to identify their roles: are they students? Salespeople? Administrators? Teachers? Football players ready to compete in the Bridgepoint Education Holiday Bowl?Best, Don Bauder

Dec. 30, 2010

Missed you guys, especially you, Surfpuppy. I don't doubt there are problems with some of the student base, but I'll throw out the investor's POV again - BPI is so much better than the competition that they will rise above the ongoing wave of scrutiny. Harkin can throw barbs all he wants, but Bridgepoint still crushes all of the benchmarks that the Senate committee has laid out, which just means there will be other easier targets for the anticipated govt scapegoating. And Bridgepoint still offers a much better product than the competitors (based on grad and loan repayment rates), which will make the company a bigger success after all the govt oversight on the industry blows over (which you have to expect, unless you really think destroying all for profit educators will be a high priority when the new Congress takes hold). BPI's stock is up over 40% since we last looked at it 4 months ago - nice return for the investors, hope you bought in back then. Happy New Year.

^ For the archives

Dec. 29, 2010

Bridgepoint stock is trading at $19.21 this morning (Dec. 30). That's up sharply from a few weeks ago but down from its $27.50 high over the last 52 weeks. Best, Don Bauder

Dec. 30, 2010

Is this obvious plug relevant to the subject at hand, Bridgepoint Education? Best, Don Bauder

Dec. 30, 2010

To return to the topic, good old Pac17 weighed in with some comments that defend Bridgepoint just as I'd hoped. Look closely, and you see nothing quantitative in that posting. "Bridgepoint still crushes all of the benchmarks . . ." What does that mean? What benchmarks? Come on Pac17, if you can respond, you surely could list a few of those benchmarks and tell us just how they "crush" them. What does it mean to crush a benchmark anyway? Exceed the benchmark? If that's what "crush" means here, it is an unusual use of the verb.

"Bridgepoint still offers a better product than the competitors." Sez who? Provide some numbers from an unbiased source please, and your claims MIGHT be convincing.

Unfortunately, the stock IS up, and it may be true that the new congress will be less inclined to crack down. But as long as there are billions of dollars flowing out to these colleges with little to show, there will be some scrutiny. And there is also a good chance that this new congress will begin to get serious about the deficit and worthless spending. That would not augur well for Bridgepoint and its cohorts.

Dec. 30, 2010

Every one of your points is excellent, Visduh. I would also add accreditation. Without it, Bridgepoint could get its just deserts. Also, the investigators from the Department of Education have not issued their final report. With Republicans taking over the House and having a larger say in the Senate, these for-profit colleges may skate. (Republicans scream about deficits, unless they are caused by tax cuts for the rich or non-regulation of for-profit colleges that get 85% of their funds from the U.S. government and provide very bad educations that do not lead to jobs.) Best, Don Bauder

Dec. 30, 2010

" "Bridgepoint still crushes all of the benchmarks . . ." What does that mean? What benchmarks?"

could be interpreted to infer they are the biggest crooks in the business.

Dec. 30, 2010

The so-called benchmark could be good or bad for taxpayers. For example, if the school is required to hit a certain benchmark, or percentage of students who repay federal loans, that COULD be good for taxpayers. On the other hand, if the school forces its recruiters (salespeople) to hit certain benchmarks -- say, enroll 12 students a month or get fired -- than that's bad for taxpayers. Best, Don Bauder

Dec. 30, 2010

Without SL dollars Birdgepoint would be BK, and that day is coming soon.

They have no product that is of value. They are in fact just a fraud.

. http://www.complaintsboard.com/?search=bridgepoint%20education .

Dec. 30, 2010

Bridgepoint is under investigation of the Department of Education. The California attorney general's office should be looking at it, although I don't know that it is. Other federal agencies have looked at the for-profit colleges. Bridgepoint gets 85% of its revenues from federal loans to its students. The resolution of the Department of Education investigation may put any federal loans at risk. That would be the end of Bridgepoint. Best, Don Bauder

Dec. 30, 2010

Visduh, regarding the details - I posted the link to our last discussion where these were discussed at length. To summarize, there are several rules that the Dept of Education has determined it will use to measure the performance of for-profit stocks. The ones that gathered the most attention include default rates and the yet-to-be settled "gainful employment", which compares student income to loan payments. In each case, Bridgepoint is at the top of its peer group and is one of only a few schools that can meet the 8% threshold (loan payments divided by income not to exceed 8%) that gainful employment describes.

That gainful employment rule, which hasn't been finalized, may be weakened in the new year. Rep John Kline, who will head the House education committee has been vocal about opposing the rules: http://www.bloomberg.com/news/2010-12-10/for-profit-education-shares-rise-as-kline-reiterates-opposition-to-rules.html

Yes, the stock is off its 52-week high, but I wouldn't have purchased it at $27.50. I was recommending it on these boards (see link in previous post) in the $13-$14 range. Hope some of you came to the same conclusion.

Dec. 30, 2010

The Republican House and the Republicans' gains in the Senate may mean that the "gainful employment" rule will be softened. The Democrats, who also like to receive lobbyists' grease, could back down, too. There is no question that these for-profit college scams may circumvent attempts to rein them in. You want to put your money on that. I wouldn't, but I am not a gambler. You might feel that Congress is thoroughly corrupt and make a bet on it. In many cases that would be a good bet. Best, Don Bauder

Dec. 30, 2010

Anhyone that buys stock in this fraud outfit needs their head examined.

It is going to go BK, only question is how soon.

Dec. 30, 2010

Not necessarily, SP. As explained above, the purchase of Bridgepoint stock is a bet on Congress's corruption. That is usually a good bet. Best, Don Bauder

Dec. 30, 2010

1,700 recruiters and 1 career counselor? OMG, does that not say it all?

Let's all remember that the current disaster in for-profit education is largely the property of George W. Bush and the voters that enabled him. Bush appointed an industry lobbyist to head up the "regulation" of these schools. What that lobbyist did was weaken the regs, of course, allowing rip-off artists like Bridgepoint to start sucking up all the federal grant and loan money.

Thanks Bush! And thanks Bush voters! You guys did the country so many awesome favors!

Dec. 30, 2010

Bush appointed an industry lobbyist to head up the "regulation" of these schools

You know it! Spelling was a thief and a fraud.

But this industry insoder baloney is not limited to just DoE, or Bushie, happens with both parties.

Arne Duncan IMO has the brain power of a circus chimp. Is he an insider hack? No, but he is not much help to the working class or the poor either.

Dec. 30, 2010

Arne Duncan is a Chicagoan with political clout. 'Nuf said. Best, Don Bauder

Dec. 30, 2010

Margeret Spelling, Arne Duncan, Bush, Obama, there is not much difference in them to me, or the working poor who are stuck in the US educational scam.

We have one big party today-controlled by special inbterests.

That one party may have two different factions- Dems and Repugs, but they are the same party.

Dec. 31, 2010

And that same group of pols now has control of the House and more power in the Senate. Best, Don Bauder

Dec. 30, 2010

Did you see Christopher Spohn resigned effective tomorrow from Bridgepoint? They claim he wasn't being forced out. I think that is B.S. I believe he was the fall guy for the very top.

Dec. 30, 2010

I heard yesterday that Spohn was out but didn't have time today to check Bridgepoint's filings. As I understand it, he was de facto CEO. Best, Don Bauder

Dec. 30, 2010

Spohn is gone, so is the VP that was directly under him (Jeff Cross), ironically both were in charge of the "Admissions" department. It had been stated that both voluntarily resigned for different reasons, but suspiciously the company changed all the locks on the buildings as if there were a terror threat--not the actions normally taken in an amicable break up.

In short order, BPE's exec team is there FOR PROFIT. Make no mistake this is the ultimate goal for Andrew Clark and friends. They push enrollment numbers in a broiler room fashion, knowing full well that there's a fine balance between brining in tons of federal SL dollars and keeping the accreditations. BPE's current philosophy is to hide the 'evil' doings by putting as much philanthropy out in the public eye as possible to keep you from seeing them pickpocket the american tax payers.

Dec. 30, 2010

I had heard Spohn and Cross got into a dispute. I don't know if that's accurate. I do know that the Department of Education investigation greatly focuses on the admissions process. Best, Don Bauder

Dec. 30, 2010

Getting to the bottom of the turmoil in admissions/marketing will be interesting, because that's where the Department of Education investigators have been spending the most time. Best, Don Bauder

Dec. 30, 2010

Spillin it... actually changing the locks is a common practice in business whether the departed was good or bad. I only knew about Chris Spohn, Jeff Cross leaving is more tantilizing. Even more validation for my original thought!

Dec. 30, 2010

Could the company be clearing the decks for some major changes? Has it been shoved into doing so by the government? Best, Don Bauder

Dec. 30, 2010

Could the company be clearing the decks for some major changes? Has it been shoved into doing so by the government?

No, absolutely not.

Their entire busimess model is based on enrolling unqualified students (who have a one in a hundred shot at graduating) and feasting on taxpayer funded student loans.

If they made changes to their busienss model to fix the problems (enrolling qualified students who actually graduate) they would have no busienss.

Their business model is built on fraud.

Dec. 31, 2010

I think the D.O.E. doesn't know what to do with the entire mess but regulate more. Yeah it is flawed because Americans aren't aware of the big pictre.

Don I think you are right. Chris Spohn leaving is a very very big deal. My guess is that the pressure cooker is full on at BPI. Who they replace them with will be very telling about how they will navigate through the new regulation pressure.

Dec. 31, 2010

jham88, changing locks when people leave is not common, it only happens when the person is a threat-economically, physically or otherwise.

Can you imagine the costs to change the locks in a large company everytime someone quit???? And there would be no need to change locks if the person quit-left on good terms.

No, locks are only changes when someone is fired or there is otherwise cause for the expense.

Dec. 30, 2010

I have worked for two different companies in two different unrelated businesses and changing locks was standard operating procedure when managers left. Yeah it is expensive and internal audit staff at both companies sited us when we didn't change the locks in a timely basis. I am just saying from my experience I saw that happen enough to make the claim.

Dec. 31, 2010

I have worked for two different companies in two different unrelated businesses and changing locks was standard operating procedure when managers left.

I have never seen locks changed myself, even when high level managers left, I guess it may happen, I don't know if it is common.

I thought you were claiming that when any employee left locks would be changed.

Jan. 1, 2011

And the person who left has to be high on the totem pole. Best, Don Bauder

Dec. 30, 2010

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