"Bridgepoint Booms Over Troubled Waters" by Will Carless and Liam Dillon, VoiceofSanDiego.org 3/23/2011
Excerpts
Signs of Bridgepoint Education's newfound prominence in San Diego begin as you're flying into the city's downtown Lindbergh Field airport. A few seconds before you land, you'll swoop past its name and logo, displayed in huge white letters at the top of 600 B Street, a downtown high-rise.
Bridgepoint announced its move into that building last spring, the same year the for-profit higher education company put its name on the Holiday Bowl college football game. The same year it began sponsoring the San Diego Symphony's Summer Pops series. The same year it injected itself into San Diego's political consciousness by donating to a campaign and lobbying city leaders for the first time.
Four years ago, Bridgepoint was barely a blip in San Diego. Today, it's made itself impossible to miss. Its operating profits have increased 5,000 percent during that time, to $216 million last year, and it's now the county's fifth-largest private employer. The latest phase of Bridgepoint's extraordinary growth has been putting its indelible stamp on the city it calls home.
"It was just — Boom! They're here," said Steve Cushman, a prominent businessman who worked with the company to secure the naming rights for the Holiday Bowl.
But Bridgepoint is undergoing another recent boom: Controversy.
Criticism of the company centers on its remarkable ability to attract students and remarkable failure to graduate them, all while receiving hundreds of millions in federal student aid dollars. The complaint: Bridgepoint has set up a system to use federal dollars to line investors' pockets rather than enrich students' minds.
Earlier this month, U.S. Sen. Tom Harkin, an Iowa Democrat, held a Senate committee hearing focused exclusively on Bridgepoint, in which he criticized the company for spending considerably more on selling its services than teaching its students. Bridgepoint shouldn't make record profits from federal loan programs, Harkin said, while most of its students were dropping out. The company, whose primary university is located in Harkin's home state, had the highest student withdrawal rates of any for-profit school the senator's committee studied.
"I think this is a scam, an absolute scam," Harkin said at the hearing.
Last month, Iowa's attorney general launched an investigation of the company's business practices and requested three years' worth of Bridgepoint documents to inspect. And, in San Diego, former students and employees of Bridgepoint have accused the company of fraud and violating the state labor code in three class action lawsuits filed since the beginning of the year.
The company argues it's forging new paths in education. By harnessing technology and creating innovative education models, Bridgepoint says on a website it launched after the Senate committee hearing, it's been able to reach vast swathes of the population who might never before have dreamed of getting a college degree.
Bridgepoint has shown no signs of slowing down. But it's also made powerful enemies. As such a strong player in the region's economy, its success or failure in taking on those enemies is likely to resonate throughout the region.
The 'Potemkin University'
Bridgepoint's business model depends on one thing: Getting people into college who wouldn't otherwise go.
That involves paying hundreds of recruiters in San Diego office buildings to call around the country and find tens of thousands of people willing to enroll in a tiny college in rural Iowa. Ninety-nine percent of those students won't ever have to set foot in Iowa, since they'll be studying online.
And the bulk of the revenue Bridgepoint receives for educating students — at least 85 percent last year — comes straight from the federal government in the form of student loans.
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Under Fire from Washington, Iowa and San Diego
While Bridgepoint has been winning fans in the local business community, it's faced some severe criticism from government overseers in Washington D.C. and Iowa.
U.S. Sen. Tom Harkin zeroed in on Bridgepoint two weeks ago in the latest in a series of hearings he has been holding about the for-profit education business. In a lengthy denunciation of the company, Harkin lambasted Bridgepoint for duplicity in its marketing, lavish executive compensation and dismal dropout rates.
The senator pointed out that while Bridgepoint was making record profits last year, 84 percent of the students in its two-year programs were dropping out, according to a sampling of students by his committee.
"In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure," Harkin said.
Since the hearing, Harkin has announced that he plans to introduce legislation to tighten the regulation of the for-profit education industry.
Clark declined an invitation to attend the hearing, but the company's new website devotes a lengthy section to responding to Harkin's concerns.
Bridgepoint says its education model serves the needs of "diverse, non-traditional students." Drop-out rates are likely to be higher because Bridgepoint offers education to older students, many of whom work full-time and aren't supported by their parents, the website states.
The Senate committee hearing was just the latest in a series of high-profile dressings-down for Bridgepoint.
In 2010, the U.S. Department of Education's Office of Inspector General concluded the company paid recruiting staff based on the number of students they signed up for courses, something prohibited under federal law.
Last month, the company disclosed that Iowa's attorney general had launched its own investigation into Ashford University's business practices. It's not clear yet what the inquiry concerns, but the attorney general's asked to inspect three years' worth of company documents.
There are also potential problems in San Diego.
Since Jan. 1, three local law firms have launched class action lawsuits against Bridgepoint.
Bridgepoint students claim in two of those lawsuits that the company lied to them about how much their programs would cost and overcharged the federal government for their education. In the third lawsuit, Bridgepoint employees argued that the company denied them pay for required meal breaks and overtime.
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