For-profit colleges rip off indebted students

by Mike Heral

Some call it the future of education, others a capitalistic behemoth running amok with little concern for its customers.

Either way, for-profit colleges have transformed the higher education landscape. In 2001, there were more than 760,000 students enrolled in for-profit schools, according to the National Center for Education Statistics. That’s a puny David compared to the public colleges’ more than 12 million student Goliath.

But by the end of the decade the disparity had shrunk significantly.

For-profit institutions grew 217 percent versus public schools’ relatively paltry 24 percent growth. David was now ready to take on Goliath. With public university and community college budgets dwindling—thanks to a prolonged recession—for-profit schools have become a way for down-ontheir-luck Americans to seize the American Dream promised by a diploma. State-supported universities frequently eliminate classes and cut enrollment. Standing there with open arms are for-profit colleges such as Ashford University, a subsidiary of San Diego-based Bridgepoint Education.

The typical for-profit student is older, already works full-time and may come with children in tow.

Most have some college experience. This might seem like an advantage against a student straight out of high school, hamstrung by the impetuousness of youth, but that’s rarely the case.

Recently, Bridgepoint has come under congressional scrutiny for knowingly enrolling students unqualified for collegiate success and then doing little to retain them.

On at least one occasion, Sen. Tom Harkin (D-Iowa), whose state is home to Ashford’s brick-and-mortar anchor school, has referred to Bridgepoint’s plan as a “scam.”

Harkin came to his inflammatory conclusion based primarily on two sobering facts: Within the past five years, Ashford’s attrition rate has been 53 percent, and its students’ loan default rate soared to an outlandish 15.4 percent in 2009.

In comparison, San Diego State’s attrition rate is 15 percent with a student loan default rate ranging from 1.7 to 2.5 percent.

Beholding the gulf between Ashford and SDSU, it’s a wonder why anyone would willingly risk burdensome debt. The problem is that until Harkin shed light on the matter and Bridgepoint sought accreditation from the Western Association of Schools and Colleges, few prospective students knew the financial risk they were undertaking.

Especially when Bridgepoint implemented the online division of Ashford University.

In 2005, Ashford transformed from a private religious school with little more than 300 students tucked near the meandering Mississippi River to the sleek school of the future for its new owner, Bridgepoint Education. Soon, it started pushing online courses. WASC estimated enrollment had grown to 100,000 students by 2012.

Nearly all of those students have federal student loans. First Street Research Group estimates Bridgepoint derived 85 percent of last year’s approximately $700 million in revenue from student loans. Because Bridgepoint is paid at the moment of registration, the school is not concerned with the high attrition or debt burden on its students.

We’ve seen unethical corporate greed devastate once powerful companies too many times before. Bridgepoint risks falling into the same hall of infamy unless it can balance its need for profit with student needs to earn a diploma worth the paper it’s printed on.

WASC determined Bridgepoint kept its students from understanding the student loan parlor trick by under-employing its post-admissions staff. Admission counselors and recruiters work at a 32-to-one ratio with students, yet the ratio was an astounding 300 students-toone-financial counselor or academic advisor.

It doesn’t get better for students that stay. WASC determined only six of Ashford’s 80 degree programs had been evaluated for effectiveness and 51 offered courses were of “inconsistent quality.” The faculty was “limited in experience, unseasoned and brief tenured” and interaction between student and professor was “often limited to a few words of encouragement.” Not the scholastic foundation an employer is looking for when diving into a mountain of resumes.

In fact, The Center for Analysis of Postsecondary Education and Employment found in a report last February, “for-profit students are more likely to be idle … six years after starting college …” and “have earnings from work in 2009 that are $1,800 to $2,000 lower than had they gone to another type of institution.”

When questioned, Bridgepoint emptily responded, “Ashford University is disappointed by the [WASC] Commission’s decision …”

At the end of its response came an item that does not ring true: “Ashford University is currently accredited by, and in good standing with, the Higher Learning Commission…”

Yet on July 13, CBS News reported HLC is “examining [Ashford] to make sure it meets standards.” PR Newswire reported that HLC placed Ashford on a “Special Monitoring” status.

I received Bridgepoint’s official response four days after it was notified of HLC’s decision. That doesn’t seen like “good standing” to me.

Bridgepoint’s lack of accreditation and truth-twisting demonstrates the need for fine-tuning the for-profit education model, if only because public universities remain far behind the online education curve.

Pursuing higher education shouldn’t evoke panic in the hearts of those seeking further education.

Students need to remember the apparent motto of many for-profit colleges: business first, education second.