Woes at Bridgepoint, United States University

United States University ails; Bridgepoint’s stock tumbles.
  • United States University ails; Bridgepoint’s stock tumbles.
  • Image by Chris Woo

United States University

United States University

State and federal regulators, legislators, and accreditors finally seem to be getting wiser to the for-profit universities. San Diego’s publicly held Bridgepoint Education — target of investigators but darling of the local business establishment — is in even more hot water. Privately owned United States University in Chula Vista is struggling to get itself off its accreditor’s probation.

Michael Clifford

Michael Clifford

Rancho Santa Fe’s Michael Clifford, who has a portfolio of for-profit schools — several of which are experiencing deep troubles — was a cofounder of Bridgepoint’s predecessor company. An investment group including Clifford wants to dump its stake in United States University, but the school has to undergo a change-in-ownership examination by the Western Association of Schools and Colleges, which put the institution on probation last year.

Bridgepoint’s attendance last year was down 22 percent from the previous year, and profits plunged 67 percent, as originally reported. On May 12, the company announced it would not be able to file its first quarter 2014 report with the Securities and Exchange Commission — an eyebrow-raiser. Preliminarily, there would have been a loss in the first quarter, said Bridgepoint, which also lost money in the last quarter of 2013.

On May 30, Bridgepoint discovered “material weaknesses in internal control over financial reporting” and, worse, said it did not know how long it would take to fix the problem. Ergo, investors won’t know what to believe for an indefinite time.

Several state attorneys general continue to investigate Bridgepoint. It recently settled with Iowa for $7.25 million. The state had charged that Bridgepoint pressured students to enroll and then misled them. The United States Department of Education and the Consumer Financial Protection Bureau are looking into the inordinately high debts and low achievement levels of for-profit school grads. For-profit colleges account for 11 percent of students and 48 percent of loan defaults.

Victory University, a for-profit college in Tennessee, closed its doors upon completion of the semester.

Victory University, a for-profit college in Tennessee, closed its doors upon completion of the semester.

As financial analyst Matt Brice points out, Bridgepoint insiders have dumped $9.5 million worth of shares since September of last year. “Lots of selling, no buying,” says Brice. Wall Street’s Warburg Pincus, which owns more than 60 percent of Bridgepoint, wants to dump shares.

Then there are the woes of United States University. Investor Clifford bought it in 2009 when it was named InterAmerican College. Last year, the school paid a $686,720 fine to the federal government when its former financial aid director was caught falsifying records to permit ineligible students to get Pell Grants. The former official pleaded guilty to criminal financial aid fraud.

In April of last year, the Western Association of Schools and Colleges sent a special team to look at the school. The following July, the association put the institution on probation for two years. The accreditation team raised “questions regarding the sustainability of the institution and its continued accreditation,” stated the association. The university’s answers about academic programs, finances, integrity, and governance provided “little analysis or data to justify some projections…and some information was dated, inconsistent and/or incomplete,” wrote the accreditor’s president. The university, which offers programs in business, health sciences, nursing, and education, is “far from being able to evaluate program quality based on good evidence.”

The university, said the accreditor, “has not undertaken analyses to look at the reasons for low enrollments and student attrition in some programs. There is an insufficient number of faculty, especially full-time faculty, to anchor and support the large number of programs being offered. [United States University] will need to either reduce the number of programs or increase the number of faculty.” It also has to come up with measurements for monitoring academic quality.

As a result of the accreditor’s sharp criticism, the university has made some program cuts and now boasts on its website of its “low student-faculty ratio.” However, it will be up to the association to decide next year whether that boast is for real.

The university’s board of trustees “met only a few times a year for two hours or less; had no formal committee structure; [and] kept insufficient records and minutes,” said the accreditor’s president. The university “has experienced serious financial problems in the past, including net operating losses.… It is not clear that the leadership of [United States University] has sufficient awareness of the urgency and significance of the issues raised in the team report.”

The university will remain on probation until June of next year, when it will be reassessed for compliance with the accreditor’s standards.

Last month, it had another visitation from the accreditor. Fresh capital has flowed into the university from Linden Education Partners, a Chicago fund that has financial positions in for-profit universities. Clifford is no longer seen around campus. The founder and chief executive of Linden is Oksana Mindyuk Malysheva, who has been on the United States University board since 2012. She is also on the board of several other small schools, including the University of Business and International Studies of Geneva, Switzerland.

Mary Ellen Petrisko

Mary Ellen Petrisko

“Change of ownership is considered a structural change,” says Mary Ellen Petrisko, president of the accreditor’s Senior College and University Commission. The desired switch of control to Linden is “under review,” she says. Some faculty members believe that the Swiss university wants to establish an American beachhead at United States University for business students. Petrisko says that if the university wants “to have a relationship with an international or nonaccredited institution, that will be one of the things we will look at.” The accreditor recently said the university’s change-of-ownership proposal was “well written and clear.”

Steve Stargardter

Steve Stargardter

“Financial and ownership status issues remain confidential,” says Steven Stargardter, provost, who had served as interim president while Timothy Cole, president, recovered from a health problem. Cole came back June 6.

Faculty members feel that United States University is in over its head. It has a campus in Orange County that once had students but no longer does. Students were told to go online last year; the facility now houses electronic equipment.

The nursing program is ailing. In the 2012/2013 years, 56.58 percent of its students passed the National Council Licensure Examination. Only 2 of 149 nursing programs in California did worse. Stargardter says the university has made steps to improve its students’ test results. Late last year, the California Board of Registered Nursing approved the university’s nursing bachelor’s degree.

There have been complaints against the university filed with the Equal Employment Opportunity Commission. “The university is confident that all allegations will ultimately be dismissed,” says Stargardter, who claims that, generally, “Significant progress has been made in all areas.”

Comments

Whatever, are they going to get Ed Brand, Alliant?

shirleyberan: The Reader's Susan Luzzaro is the one to ask on that question. She has done a great job covering that scandal, which does touch on United States University, as she has reported. Best, Don Bauder

I am very glad that these institutions that claim to be colleges and universities are being exposed for the frauds that they are.

This is another example of people trying to turn education into Big Business, with absolutely no thought being given for teaching--and there are so many examples of that right now.

Integrity in education used to be taken for granted, but that is no longer the case. Don, what is Michael Clifford's background? What about Oksana Mindyuk Malysheva? Did they approach the field from a background in education, or do you think they spotted the opportunity (because of all the grants offered to students) and got in purely for profit?

eastlaker: Michael Clifford never attended college, but purports to be an expert in education. Oksana Mindyuk Malysheva has a PhD in physics, and worked for consultant McKinsey and for Motorola before taking an interest in for-profit education. Obviously, these for-profit schools are in the game for profit. That is one reason they cut so many corners on educating students. Best, Don Bauder

CORINTHIAN COLLEGES OF ORANGE COUNTY COULD SHUT DOWN. Corinthian Colleges, an Orange County-based for-profit education company with 75,000 students around the country, warned today (June 19) that it may have to shut down because of clashes with United States regulators, the Associated Press and Los Angeles Times reported.

Corinthian said the Department of Education has limited the schools' access to federal funds after it failed to provide documents and other information to the agency. Earlier, there were allegations that the company altered grades and student attendance records and falsified job placement information in ads, according to the A.P.

The company's stock plunged more than 64% today. The Times said that Corinthian warned that Department of Education sanctions may jeopardize cash flow, and the company may not be able to continue as a going concern.

Bridgepoint stock dropped 3.85% today. Stocks of the for-profits tend to get hit when there are signs that the government is cracking down on industry abuses. Best, Don Bauder

I feel for the people who may have thought they were actually going to get an education, but who did not. At least, not the sort of education they had intended to get.

eastlaker: Federal probers are definitely looking into the quality of education provided by the for-profits. Investigators are concerned that students pay a great deal, pile up huge debts, and do not get an education that helps them get a job. Best, Don Bauder

So further word is that the DOE is bailing out Corinthian Colleges, at least through the next year. Diane Ravitch has commented on it and has quoted Pete Greene, who comments on education on the blog Curmudgecation, or something similar.

There are all sorts of connections to the ed-for-profit people in this astounding mess. I am really starting to fear for the future of education.

One of the most frightening aspects is that government has decided to support Corinthian Colleges. This is not a good thing.

Michael K. Clifford; The Reader was a credible, wonderful paper that helped make a positive contribution to San Diego...and it still is. Best, Don Bauder

Nice one Donny - you hit a nerve, again. Somebody has a chunk of change to lose if the public learns truth about legal and/or illegal, fear-monger-liars. Don, we have many rip-off reasons to be angry but humor and temperance prevails in your studies and reporting of factual funny business. Same 'Ol, Same 'Ol. Different day, another name to insert in the blank.

shirleyberan: It should be obvious by now that I cock an eyebrow at for-profit colleges and universities. Best, Don Bauder

shirleyberan: Aw, shucks... Best, Don Bauder

shirleyberan: Susan Luzzaro is doing a terrific job covering that scandal. Best, Don Bauder

Given Don's report, it's interesting that the local paper, the Star News, carried the article pasted below about the Bayfront Charter that is leasing space from United States University. Riley, the executive director, says the space is "stable."

http://www.thestarnews.com/latest-news/groundwork-set-for-bayfront-high-school-campus/

I note that the campus utilizes distance learning a lot. Wonder if that has ramifications for the high school charter.

Susan Luzzaro: The high school being close to United States University gives it stability? Really? Best, Don Bauder

That might just be a clue regarding how unstable these two entities are. If two very precarious objects lean on each other, they might keep from tumbling for a short time.

eastlaker: This happens in business all the time. Two ailing companies merge on the idea that 2 + 2 will equal 5. Usually, 2 + 2 equals 3 -- even when two good companies merge. Best, Don Bauder

It is sad that most of these for-profit universities are scams that charge a great deal and deliver little or no education. There should be a role for the for-profit in bringing some new, out-of-the-box thinking and approaches to higher education. But so far, I've heard of no such operation at all, and don't expect to learn of one for a long time. Private enterprise delivers a wonderfully high standard of living to most of the US, and does it as efficiently as you'll find in the world. Why not in higher education? What I see instead is the public campuses trying to outdo the for-profits with lavish claims and high tuition and fees. Arizona State is making a push in that direction, and it is a public university. What's in it for them? Follow the money.

Visduh: Yes, follow the money, even at the nonprofits. Look at public records of the major universities, and compare the salary of the football coach with the salary of the president. Nonprofits have gone astray, too, as the massive pile of debt attests, but nothing remotely like the scams of the for-profits.

Incidentally, there are a few good for-profits. They are technical schools that teach young people a particular skill, often in electronics. Best, Don Bauder

I know I'm late with my comments, but I wanted to add the my esteemed US Representative Duncan Hunter wrote an editorial in the UT singing the praises of Bridge To No Where University. They donate a lot of money to his reelection campaign. It should also be stated that Bridge To No Where gets most of their money from the federal government through Pell Grants and ripping off veterans for their GI Bill money. That is our hard earned tax money that props up this phony school.

zollner: You have put your finger on one of the anomalies -- I should say hilarities -- of the for-profit university phenomenon. Business interests back the for-profits, as do Republicans. Yet they are the same people who scream about federal government spending. For-profits get 85% of their funds from Pell grants and other government sources.

Bridgepoint gets far more than 85%. That's because the money its students get from the military doesn't count within that 85%, and Bridgepoint pursues military people aggressively.

People like Duncan Hunter and the San Diego downtown oligarchs who cheer for Bridgepoint are total hypocrites. Basically, most for-profits are scams against federal taxpayers. Best, Don Bauder

I too was disappointed that Hunter defended and supported these scam schools. At the time, I'd hoped it was a result of his not understanding the situation and having heard only one side of the story. He's one of the few veterans of this recent pair of wars serving in Congress, and is a voice for his fellow vets. We should note that the head of the new organization of Iraq and Afghanistan veterans says that these operations are rip-offs, and wants them shut off from further funding. I'd wonder if Rep. Hunter is listening, and if his opinion has changed recently. Maybe his field office could reply.

Visduh: I believe someone on this blog said Hunter got fat donations from Bridgepoint. 'Nuf said. Best, Don Bauder

Minor, yet interesting point--when I happened to notice Mr. Clifford's comment above (in the facebook comment section), it became immediately apparent that for someone who claims to be promoting education, he himself could use some assistance in reviewing certain basics with regard to communicating in the English language.

eastlaker: Yes, Clifford's grammar is pretty bad. However, he has even bigger problems with investments falling apart. Best, Don Bauder

Oh, the perils of slapdash operations.

eastlaker: "Slapdash" is putting it euphemistically. Best, Don Bauder

Yes, well, vocabulary has always been one of my joys.

eastlaker: I think you were deliberately attempting to put the matter softly. Best, Don Bauder

Many people probably already know this, but there are a couple of blogs that are important reads for anyone interested in what is going on in education in the US right now.

http://dianeravitch.net/

http://curmudgucation.blogspot.com/

There is a tremendous effort to profit from education these days, and not in the sense that could be considered traditional--but instead from churning federal and state dollars into the hands of corporate entities. This has the potential to truly destroy the fabric of this country.

Regarding organizations such as Bridgepoint and their founders/corporate heads...it is as if they are thinking, "If these people are stupid enough to serve in the military, they are stupid enough to fall for what we are selling...and our government is stupid enough to let us steal from both ends"--getting government funding to set up these shams, and taking the government funds from the students.

Revolting.

eastlaker, I'm going to give you the opportunity to reconsider your inflammatory rhetoric. Calling people "stupid" for having served their country isn't like you, and since we usually agree, I'm disappointed in you. If you had used the term "naive" or something like "idealistic and unworldly", I'd not take umbrage. Most of those folks who fall for the Bridgepoint pitch are uninformed about higher education, not stupid.

I think you owe every veteran, starting with me, an apology.

Visduh: I was a six-monther -- clerk typist -- in the Army, followed by several years in the National Guard. I don't need an apology from eastlaker, and probably don't deserve to be called a veteran anyway. Best, Don Bauder

But I want an apology. That comment was most offensive to me and tens of thousands of other veterans in the county. Well, eastlaker? To repeat the comment above, I found that comment "revolting."

Visduh: Back in my day, there was a draft. Stupidity had nothing to do with serving in the military. Unless there was a special consideration, usually related to physical or mental health, you served your time. Best, Don Bauder

I will attempt to clarify: I did not say, and never would say that those who serve in the military are stupid.

I am saying that those sham institutions who are trying to rob benefits from those who have served in the military are very cynical, cynical enough to have no scruples, and cynical enough to disparage those who have served. They are the ones who are insulting to those trying to better themselves. To the point that those in the for-profit field might very well be thinking, "it is as if...".

Why else would they target these vets and their benefits.

I used a literary device that unfortunately didn't come through as clearly as it should--subjunctive clauses aren't all that common these days. I am hoping that the truth about the non-profits will become very widespread, and no further vets will find themselves with GI Bill used up, thousands in loans and no real education to show for it.

Sorry to have caused you anger and pain. That was not my intent. I feel that with all the turmoil in education now, all vets need to be warned in no uncertain terms to avoid the for-profits.

OK. Strictly speaking you didn't "say that those who serve in the military are stupid." But to use language like that said plenty to me about your own attitude. If that subjunctive clause was merely a literary device, I stand corrected. I hope that is the case.

My father was in the Army Air Corp, his brother was killed on the Arizona, my husband is retired career Navy.

My point is that there are people out there who do not have respect for military service, and are very willing to take advantage. This must be stopped.

eastlaker: I wish somebody like you were Secretary of Education. The government has not had the guts to stop these abuses. Best, Don Bauder

Thanks for that! This is one more reason why campaign reform is a necessity. Influence peddling, instead of being the order of the day, should be a federal offence. Those making the laws should make their decisions on what is best for the country, not who has given them the biggest bribe.

Visduh: I hope we can settle this peacefully. A lot of people, myself included, put things on the blog too hurriedly, and don't state our thoughts as clearly as we should. Best, Don Bauder

eastlaker: The government talks big about stopping the scams, then does very little. Corinthian Colleges, threatened with a shutdown, is already wiggling off the government hook. Best, Don Bauder

These cold-hearted scam artists collect corporate welfare and then further cheat young people who are starting out.

eastlaker: I agree with that assessment. Best, Don Bauder

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