By Kay Steiger
March 11, 2011
Caption : At a hearing this week, Sen. Tom Harkin examined one for-profit education company that reports exponential growth despite its students poor performance.     

Thursday Sen. Tom Harkin (D-Iowa) chaired a hearing of the Health, Education, Labor, and Pensions Committee that examined a “case study” of one for-profit education company, Bridgepoint Education, Inc., which has experienced near-exponential profit growth in the last few years despite low graduation rates.

Bridgepoint owns two colleges, Ashford University in Iowa and the University of the Rockies in Colorado. Both schools were struggling non-profit colleges that went by other names and were purchased in the mid-2000s by former University of Phoenix executives so they could convert them into for-profit, mostly distance-learning schools. Ashford’s student body at the time of purchase was just over 300, now the Bridgepoint has more than 77,000 students, 99 percent of them online. For a long but wonderfully written narrative on Ashford and how Bridgepoint got into the for-profit business, read Chris Kirkham’s report over at the Huffington Post. (Bizarrely, the school has a brand-new 500-seat football stadium and Bridgepoint sponsored the Holiday Bowl, even though the school has no football team.)

Harkin took issue with the fact that despite such growth of the company, the students didn’t seem to be meeting with success. Over 63 percent of students who enrolled during the 2008-2009 school year withdrew before completion as of September of last year, according to documents presented by Harkin at the hearing. But despite dismal graduation rates, Bridgepoint recorded more than $216 million in profits in 2010; Harkin pointed out that 86.5 percent of Bridgepoint’s revenues come from federal funds, including federally subsidized student loans, Pell grants, and GI Bill funds.

“In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure,” Harkin said at the hearing. “Bridgepoint is a private company, but it is almost entirely dependent upon public funds … I think this is a scam, an absolute scam.”

Indeed, Harkin submitted more than 700 student complaints from Ashford students for the hearing’s record. The complaints include misrepresentation on the part of the school’s recruiters, lack of contact from faculty, discoveries that their financial aid was mishandled, and students feeling they’re worse off after having to drop out. Harkin noted that Bridgepoint employs more than 1,700 recruiters for its massive student body, yet only one full-time employee tasked with job placement.

One student complained that, while recruiters assured him that the entire cost of his education could be covered by his GI Bill benefits, he received a bill from Ashford informing him that he had incurred over $11,000 in additional costs. In a formal complaint letter to the school, the student veteran wrote, “I am very disappointed in the process and feel that the integrity of the process has been compromised, either by misleading statements or deceptive practices.”

Other students who sought masters in teaching degrees discovered the program they were taking allowed them to be certified in Arizona because the program was conducted through a “cooperating school” based there. This left many students expecting to get an Iowa teaching certificate frustrated and without a clear way to obtain their desired credential. One student discovered this fact a year before he was scheduled to graduate. In a complaint to the school, he wrote, “I was really blown away to find out I had spent so much time and money at a College that I was not going to be able to obtain my Teacher’s license from.”

As Kirkham reported, “The goal, employees say, is getting ‘starts’: students who fill out the paperwork for student loans and make it through at least four weeks of their first five-week course. That is the point at which the university is able to keep the student's federal aid money, regardless of whether they continue their studies. After that, according to the Ashford employees, any form of counseling drastically drops off.”

Kathleen Tighe, who is an inspector general with the U.S. Department of Education, testified at the hearing that in an audit of Ashford, she discovered Ashford was improperly distributing student aid to students. “Seventy-five percent of the improper disbursements to students in our sample were made to students who never became eligible,” Tighe said. Bridgepoint hadn’t returned the improperly obtained student aid to the federal government, and said on a recent report she’d seen that Bridgepoint was “sitting on $130 million” in these types of funds.

The “case study” presented by Harkin and reported on by Kirkham points to significant problems within the for-profit education industry. It’s clear regulation and accreditation, two aspects long believed to keep schools offering high-quality education, haven’t kept up with massive shifts in the for-profit education industry. Bridgepoint’s CEO, Andrew S. Clark, was invited to testify before the committee, but declined. Clark reportedly received a salary of $20.5 million in 2009.

In the meantime, for-profit education lobbyists have been pushing to weaken any impending regulations. Harkin said he hadn’t seen comparable pushes against regulations in his 37 years a senator. As Steve Burd of Higher Ed Watch reported, the Association of Private Sector Colleges and Universities, formerly the Career Colleges Association, recently held a fundraiser for Rep. John Kline (R-Minn.) after he proposed and successfully added an amendment to a budget resolution that would defund a yet-to-be-implemented regulation on for-profit and other career schools that aims to increase accountability.

Meanwhile, the debts racked up by students at Ashford University still suffer from dismal graduation rates and Bridgeport executives will continue to draw multi-million dollar compensation packages. 

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