New rules could hurt for-profit schools

Bridgepoint stock has plunged this week

The Obama administration is moving forward with a regulatory proposal that should, if it goes into effect, curb the abuses of for-profit colleges.

Students at these schools represent 13% of higher-education enrollment but account for more than 30% of student loans and almost half of defaults; those loans generally come from federal government programs.

Department of Education secretary Arne Duncan, in discussing the program to come out today, said yesterday (March 13), "Too many of these programs fail to provide students with the training that they need at taxpayers' expense and the cost to these students' futures."

San Diego's Bridgepoint Education, which Sen. Tom Harkin calls a scam, gets more than 90% of its revenue from government loans, including from the military. The stock was belted earlier this week when the company announced a 12-cent-a-share loss in the fourth quarter, missing analysts' estimates of a slight profit. This morning, the stock is down another 1.22% to $14.82. On March 10, it closed at $19.01.

Rancho Santa Fe's Michael Clifford fancies himself a financial expert in for-profit colleges, often religious ones. In recent months, his portfolio of schools has had problems. The latest victim: Victory University, a Memphis-based "Christ-centered" college, is closing because of financial problems, according to the Chronicle of Higher Education. In my column about Clifford's woes May 8 of last year, I mentioned that Victory was having accreditation problems.

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So at least Arne is good for something.

eastlaker: Trouble is, Duncan has been beaten down in other initiatives to rein in the abuses of the for-profit schools. Also, in some cases, he was offering pusillanimous reforms. Sen. Tom Harkin, who has said that Bridgepoint is "an absolute scam," thinks the current initiative is too weak.

Bridgepoint closed down 2.94% today at $14.55. Best, Don Bauder

It was a hoot to listen to a radio newscast today that mentioned this story. The newscaster read the Arnie Duncan quotes deadpan, and then went on to the next piece. Not one mention of Bridgepoint or Ashford or any others that have facilities here in the local area.

Visduh: Bridgepoint is beloved of the San Diego establishment because it has sponsored bowl games and the like. The Chamber of Commerce regularly lauds the company. So-callec conservatives love the idea of for-profit colleges, even though they are plucking 85% of their revenues from the federal government. Best, Don Bauder

It is also quite likely that Bridgepoint/Ashford violates labor law by requiring quotas for their phone recruiters. Let's just say that I have heard that people do lose their jobs if they do not sign up a certain number of students in a certain amount of time.

They are also, according to what I have heard, requiring the recruiters to follow up with "their" students, encouraging them to do their homework, continue in school, and so forth. Not necessarily a bad thing--but again, an indication that trying to solidify/maintain income from the students is problematic.

eastlaker: One of the Department of Education's issues with Bridgepoint all along has been its practice of rewarding recruiters for the number of students they sign up. Best, Don Bauder

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