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The U.S. Senate's Committee on Health, Education, Labor and Pensions issued a report today (July 30) on the massive failures of for-profit universities, and San Diego's Bridgepoint Education comes out on the short end once again. (The committee had a special report on Bridgepoint alone last year, and the chairman, Sen. Tom Harkin, declared that the company was simply "a scam.")

Statistics in the new report certainly bear that out. In 2010, Bridgepoint spent 30.3% of its revenue on marketing. That was the highest percentage of all the schools studied. A two-year degree in business at Ashford, Bridgepoint's major operation, costs $30,574; a two-year business degree at East Iowa Community College costs $7,936. Ashford charges a "technology services fee" of $1,290 and students bitterly complain that they were never told about it when the company made its pitch, says the committee. A full 98% of Bridgepoint faculty members are part-time, versus a collective 80% of the 30 schools under study. Students find belatedly that an education degree from Ashford is not accepted by American states for a teaching position. There is another step in the process, and graduates say they were not told of that.

But the moneybags behind the company are doing fine. Management salaries are comparatively high. Wall Street's Warburg Pincus, which owns two-thirds of the stock, will sell it all over the next 36 months. That should net the firm $773.1 million (although the recent selloff in the stock could dent that figure.)

Importantly, students and faculty members continue to complain about the company's practices to the Senate committee. "Student complaints document multiple examples of deceptive and misleading recruiting practices," says the committee. There is "serious doubt" that Bridgepoint students receive an education of "adequate value," says the committee, noting that in 2010, American taxpayers pumped $1.2 billion into the company.

Bridgepoint remains a darling of the San Diego business establishment, such as the Chamber of Commerce and U-T editorial page.

Comments
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FOR-PROFIT EXECUTIVE PAY TIED TO PROFITS, NOT EDUCATIONAL PERFORMANCE. Rep. Elijah Cummings, ranking member of the House Committee on Oversight and Government Reform, has released a study indicating preliminarily that for-profit schools based top executive pay on profits, not educational attainment. Cummings sent letters to 13 publicly-traded schools. All 13, including San Diego's Bridgepoint Education, said corporate profits were a primary factor in determining chief executive pay. The Senate committee cited above particularly noted high pay at Bridgepoint. Bridgepoint gets 93.7% of its money from the federal government.

July 31, 2012

From the begining their business plan was to profit from the lax oversight of the government and the huge $s the feds make available for student loans. The result: students are saddled with imposible debt and the corporate leaders and investors walk away with huge returns...and it's all legal! This truly has become the "American Way".

Aug. 1, 2012

I can't disagree with your observation in general terms. The government makes too much money available for student loans and then doesn't monitor that money. That's a perfect setup for scam artists. The for-profits moved into the breach and raked in dough. But there are standards and laws pertaining to these for-profits, and the DOE is now in the process of determining whether Bridgepoint violated rules. Ditto for states: 3 of them are investigating Bridgepoint for consumer fraud violations. Best, Don Bauder

Aug. 1, 2012

Ah, but the point is the heads of Bridgepoint have made there money. If they get caught now they don't care, they cashed out already. No one is going to jail...they almost never do and my guess is their business model had a life cycle so they knew there would be an end but didn't care because they would be long gone.

Aug. 1, 2012

The top executives have raked in bundles. CEO Andrew Clark swept in around $20 million a couple of years ago. Warburg Pincus and the early insiders will make big bucks when they sell, and they sure won't wait until it hits zero to unload. Best, Don Bauder

Aug. 1, 2012

The committee had a special report on Bridgepoint alone last year, and the chairman, Sen. Tom Harkin, declared that the company was simply "a scam

it is a scam, a scam that is perpetuated by the US Gov, b/c without their approval of the student loans going to these diploma mills the diploma mills would never be in business.

Aug. 1, 2012

The Bridgepoint brass, early investors, and the U.S. government all share part of the responsibility for this ripoff of American taxpayers. Best, Don Bauder

Aug. 1, 2012

All three interchange jobs at will........

Aug. 2, 2012

Another good point. Regulators shift in and out of the private sector all the time. We tried to ameliorate that by deregulating. But in many egregious cases, deregulation failed -- Wall Street being the prime example. Regulation doesn't work and neither does deregulation. Anyone got any ideas? Best, Don Bauder

Aug. 2, 2012

Lots of things to chew on in that video. Best, Don Bauder

Aug. 2, 2012

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