For-Profit College CEOS Rolling in Dough, Including Bridgepoint

Bloomberg News has a comprehensive story this morning (Nov. 10) on huge sums of money that officials of for-profit colleges rake in. Look at these numbers from a pay/performance standpoint: the graduation rate for first-time, full-time candidates for four-year degrees at for-profit colleges is 22%, compared with 55% at state colleges and 65% at private non-profit universities. The loan default rate at for-profit colleges is three times the rate at conventional colleges and universities. The chief executive of Strayer Education took in $41.9 million last year -- 26 times the compensation of the highest-paid president of a traditional university, says Bloomberg. Harvard pays its president $800,000 a year. Top executives at the 15 publicly traded for-profit colleges received $2 billion during the last seven years from dumping their stock.

Andrew Clark, CEO of San Diego-based Bridgepoint Education, is the second highest-paid executive of for-profits, raking in $20.5 million, says Bloomberg. A company spokesperson says that is an anomaly because of a $19.4 million stock option grant. As reported here in August, Clark, who controls 5.6% of the company's stock, filed plans to sell shares that may be acquired upon exercise of stock options. He can sell up to 100,437 shares per month. On August 5, he acquired 50,297 shares that he had received through an option for 31.5 cents each. He immediately dumped them for $15.05.

Bridgepoint gets 85% of its revenue from federal student grants and loans -- about standard for the industry. Between 2005 and 2009, the Department of Education's Inspector General probed Bridgepoint to see, among other things, if its remuneration to its marketers, who recruit students, was in line with federal regulations. In its most recent quarterly report to the Securities and Exchange Commission filed Nov. 2, Bridgepoint said that if the Office of Federal Student Aid were to assess a monetary liability, suspend or terminate the company's participation in federal loan programs, Bridgepoint could respond to the order.


Apparently, being a private education CEO at a student loan-eligible institution is much, much better than being a city government employee with a maxxed-out lifetime pension of a mere $6 million...

Response to post #1: Most of those for-profit college CEOs get rich by paying almost nothing for founders stock, then having an IPO. If you only pay $31.5 cents for a share of stock and dump it for more than $15, you can rake in a bundle. That's what Clark of Bridgepoint is doing. Ditto for the CEOs of a lot of Bridgepoint's cousins. Best, Don Bauder

The for profit colleges are a major scam.

And this really drives the point home.

A substandard, most likely uselss, education at 10 times the cost of a state school, where the federal loan money will drive the student into default when they cannot get hired, or hired but cannot make payment-and taxpayers will take it in the shorts while the CEO's and their fraud run rampant.

Does anyone see the most recent bubble here? A more-is-better philosophy has existed in the US for generations in regard to education. Most of that has equated with money in the form of lifetime earnings and well-being. So even a real dufus can head out to a college or university and earn a degree and then expect to have greater earnings. Sadly, that has been true for decades. But with hundreds of thousands of graduates of the universities that are owned by the for profit corporations, have they overwhelmed the job market? Default rates of graduates of those schools says that is what occurred.

This trend could go on for many years to come, but someone has to pay for the party. In a manner analogous to the liquidity that fueled the dot-com/tech boom, and then the real estate and home loan boom, the federal government is the culprit. When/if the feds REALLY turn off the spigot, this bubble will burst.

Could we see an end to this "get a degree, any degree" binge of folks who are desperate for a chance at the brass ring? It seems inevitable. And it is probably a good thing. Excess education, especially when it is really only a caricature of real education, does nobody good. The result may be a decline of enrollment at all levels of higher education, and a retrenchment of many colleges and universities.

Response to post #3: Some of these for-profit colleges are boiler rooms that are being financed by the federal government. But it looks like the new Republican majority in the House will try to let these colleges off the hook. I thought the Republicans were interested in lowering the deficit. Not if it involves discomfiting a private sector company. Money talks, but why must it nauseate? Best, Don Bauder

Response to post #4: My wife, who has a PhD in plant ecology from UC-Davis, taught at the college level for more than a decade. She had been a high school teacher in the 1960s. She often says that college students in the 1980s, 1990s and 2000s were less prepared and less interested than high school students in the 1960s. Best, Don Bauder

RE #6:

For many years, there has been a tendency for teachers to pick up a master's degree as a way of getting to the maximum pay rate in an elementary school classroom.

I wonder how many of those master's degrees came from a university actually accredited by the Western Association of Schools and Colleges, as opposed to something that just might be classified as a "diploma mill" that has been merely accredited by the US Department of Education to receive student loan income...

School districts will NOT give credit for degrees from diploma mills, they always have to be from the highest accreditation, which are the regional accreditation agencies. In CA it is the Western Association of Schools and Colleges (WASC).

Where you find the diploma mill fraud is in public union employee CONTRACTS (not schools, but PD and FD's) where they get extra pay for degrees, but the degree is not specified to be from an accredited school. Vallejo CA was notorious for this and it all came out in the BK case.

Response to post #7: She doesn't remember him. Best, Don Bauder

Response to post #8: The graduates (the very few) of the for-profit colleges are working for minimum wage if they have a job at all, but the CEOs of the colleges are raking in millions every year. So what else is new? Best, Don Bauder

Response to post #9: The same is true in other occupations, such as firefighting, as I understand it. Bad practice. Best, Don Bauder

Response to post #10: Things came out in that Vallejo BK, but it didn't tackle the main problem: existing excessive pensions. Best, Don Bauder

It was tragic how these people were ripped off, and a wonder why it is allowed. Why these "schools" would be allowed to accept these loans.

It is a fraud set up by private sector firms like Sallie Mae and NelNet with the full complicity of the US Dept. of Education/Government.

I have been in a lawsuit over a fraudulent student loan for more than 5 years now-next stop the U.S. Supreme Court.

Response to post #15: We are proud to have a lawyer who will argue before the Supreme Court as a distinguished and most prolific poster on this blog. Best, Don Bauder

Locally, a great many of those MA's granted to teachers some time back came from the infamous US International University, known by the acronym USIOU due to its persistent financial problems. USIOU also granted PhD's and EdD's to some very suspect people. One of the PhD recipients was David Chigos who went on the found and run, as a private fiefdom, the even-more questionable National University. Oh, yes, those institutions had accreditation, often provisional or probationary and grudgingly granted, but they had it.

NU catered heavily to active-duty service members who had the DoD pay for their classes. That accounted for its heavy presence in San Diego and Sacramento (when that city had two large USAF bases, now closed.) USIOU was a shell game of "campuses" spread around the world, none of which was ever current in paying its bills. The guy who ran USIOU was a clergyman-cum-financial wheeler dealer who managed to keep himself in the catbird seat for over 30 years with the help of an even-more questionable board.

In their own way, both of those institutions were as much a scandal as this current for-profit educational scam. Many of the degree recipients still think they received the proper education in exchange for their money. Perhaps many, even most, did learn something. Was it equivalent to the same degree at a state university, UC campus, or traditional private university? I doubt that.

While at the helm of NU, Chigos had several members of his family employed there, and all were drawing princely salaries in an era when educrats did not pull down the bucks they routinely are paid now.

There are parallels here, but the scale of the compensation going to Clark and many others puts his predecessors into the piker category.

Thanks for filling in the gaps in my memory.

I tutored heavily at City College for the longest time between 1985 to now. I recall from the 80's and 90's a number of well-intentioned but not top-drawer students seeking elementary education certification starting with transfer classes from City before going on to SDSU. From my earlier times working as an instructional aide in the SD Unified School District, I knew of a tendency for USD School of Education graduates/ teachers with seniority to look out for each other and new USD grads while generally tending to shun the SDSU graduates as to teaching assignments.

NU and USIU post-graduate diplomas were looked at as merely ticket-punching ploys for pay raises after leaving SDSU.

Response to post #17: At least Chigos was removed. I believe many if not most USIU students were foreign, financed by the U.S. government. USIU had a beautiful campus. Is it still there? Is it used as an educational institution? I guess I should know. Pardon my ignorance. But I would like an answer. Best, Don Bauder

We are proud to have a lawyer who will argue before the Supreme Court as a distinguished and most prolific poster on this blog

I am only asking the SCOTUS to review it, SCOTUS review is discretionary and it only takes one case out of every 150 it receives-your chances of actually being granted review are slim, very slim. But you take you swing at the plate and hope for the best.

If the case is accepted, can we say you are qualified to argue before the Supreme Court? Best, Don Bauder

USIU had two campuses during its existence. The Point Loma campus was sold to what is now Point Loma Nazarene University. It is a beautiful place under the current ownership, and has had many buildings added during that time.

Don, I assume the campus to which you refer was the Pomerado Road campus of USIU, close to Miramar NAS, now MCAS, Miramar. That is still used as an educational facility by the successor to USIU called Alliant International University, and it claims a number of other campuses both in the US and abroad. Twenty years ago that campus was looking woebegone, and I haven't been there since. I think it can be assumed that it is in somewhat better repair now than it was then. So it is alive and functioning.

USIU had two campuses during its existence. The Point Loma campus was sold to what is now Point Loma Nazarene University. It is a beautiful place under the current ownership, and has had many buildings added during that time.

==================== I don't think the Point Loma was USIU before Point Loma took it over. Point Loma has been at that site since the late 1970's. I had a track camp there in the summer of 1978 (UCLA Coach Jim Bush ran his track camp there).

I thought Western State or Balboa University was the prior school, but could be wrong.

I'll bet you were great in the 100 yard dash, SP. Best, Don Bauder

Woot! Loma!

this reminds me, i keep meaning to write a thing about school...

/alumna pride

Woot? Is that how wood is spelled at Point Loma? Best, Don Bauder

Thanks. I know about Point Loma Nazarene. Yes, gorgeous -- I've been there several times. I was referring to the Pomerado Road campus that was also very pretty the last time I was there, which was probably 20 years ago. Best, Don Bauder

I know about Point Loma Nazarene. Yes, gorgeous

Best Baseball field in college Baseball...............

The softball field was better. Was, since it has gone back to the city.

What a setting for a softball game! Best, Don Bauder

Some of the Point Loma Nazarene kids would hang out at our USD dorms (92-94) because we could have beer on campus... but not kegs. Kegs flying off 3rd floor outdoor stairwells was considered to be very uncool, especially among us older transfer students. Waste not, want not...

I'll bet USD wasn't as beer-friendly as my alma mater, Wisconsin. Best, Don Bauder

I'll bet USD wasn't as beer-friendly as my alma mater, Wisconsin

Wisconsin has a reputation shall we say..."fun"!!!!!!

Dedicated to all college students who ever attempted to survive on a liquid diet...

Professor Larry Miller on the Five Stages of Drinking:

One day, while I was still at the U-T, I was slated to give a speech to a group of Wisconsin alumni, and then take them on a tour of the U-T. Prior to the speech, I said to my colleagues in the business department, "I want everyone on their best behavior. I am bringing a bunch of University of Wisconsin alums through the department. These people didn't drink and party their way through college, as you did. They had their noses buried in the books around the clock. They probably have not heard profanity, and if anyone has alcohol on his breath, they will be shocked." I got a few laughs. Best, Don Bauder

As I recall, you could hit a home run into the ocean. It might float all the way to Asia, setting a record. Best, Don Bauder

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