SD-Based, For-Profit University Under Scrutiny By Feds
Monday, March 28, 2011
We'll hear about the troubles plaguing the fast-growing San Diego company Bridgepoint Education.
If you were asked what private businesses made up the top five employers here in San Diego, you might mention the hospitals Sharp, Scripps and Kaiser then, Qualcomm and then - would the name Bridgepoint Education come to mind?
Probably not. One of the biggest employers in the city is a relative newcomer. And even more surprising is what the company does - it's a for-profit higher education business. Unfortunately its business practices have recently been the subject of a Senate committee investigation.
Will Carless, is a reporter/blogger for voiceofsandiego.org
Liam Dillon, is a reporter/blogger for voiceofsandiego.org
Brian Moran, Association of Private Sector Colleges and Universities
CAVANAUGH: I'm Maureen Cavanaugh, you're listening to These Days on KPBS. If you were asked what private businesses made up the top five employers here in San Diego, you might mention the hospitals, sharp, Scripps, and Kaiser, and then Qualcom, and then -- would the name bridge point come to mind? Probably not. One of the biggest employers in the city is a relative newcomer, and even more surprise suggest what the company does. It's a for profit higher education business. Unfortunately, its business practices have recently been the subject of a senate committee hearing. Joining me to discuss the controversies surrounding the bridge point company are my guests, voice of San Diego reporters Will Carless, and Liam Dillon.
DILLON: Good morning.
CAVANAUGH: Their recent article on the subject is called bridge point booms over troubled waters. Let me start with you, will, and you start the article with bridge point building located downtown San Diego on B street, but sense this is a for profit higher education business, where is the campus?
CARLESS: Well, they have two campuses, the biggest campus is called ash Ford university, which is in rural Iowa. It's in a town called Clinton Iowa. It used to be sort of a finishing school run by an order of Franciscan nuns, and I think it was called the Franciscan university of the prairies or something.
CARLESS: Right. So that's their sort of physical campus, now, of course only about 850 or something of the colleges' 77000 odd students have to go there, 99�percent of the students of ash Ford university are actually on line students. And there's another university called the university of the Rockies, which is a small former psychology school in Colorado, as well.
CAVANAUGH: So this is mainly an on line higher education yesterday.
CARLESS: Absolute. Yeah. 99�percent of the stunts.
CAVANAUGH: And what kinds of courses are offered?
CARLESS: The schools are -- I think that's well over a hundred, they do everything from sort of accounting to child development to teaching, to psychology, you know, the whole gamut. It's mainly bachelors' programs. They've got a few masters programs as well.
DILLON: That's correct, and they keep running courses -- in fairly [CHECK] semesterish type of situation.
CAVANAUGH: Tell us, how quickly has this bridge point education business grown?
CARLESS: Well, it's -- I think the story is that it's grown, it's enrollment has grown or it's profits have grown 5000�percent.
CARLESS: Since 2007. I mean, this company was really just a blip on the radar back in 2007, it had sort of a few employees, and now it's right up around 6000 employees, most of whom are in San Diego. It's got an enrollment of, you know, close to 80000 students rit now. It's become a massive, massive company, generating profits in excess of $200�million a year last year.
CAVANAUGH: And liamma, there's a reason, a convince dental reason, a change in federal government education loan policy that has contributed to the growth of bridge point.
DILLON: Yes, back in 2006, the federal government decided to change its rules regarding the number of students who were allowed to be enrolled in distance education, and the school still receives federal funding. So for 2006, the rule was only 50�percent of students were allowed to be on line or else the school couldn't have access to federal funds. Now that law has been done away with, and now you'll see a situation like you have at bridge point or rather ash Ford where 99�percent of the students are on line, and [CHECK].
CARLESS: Most of it's money from the federal government, I think it's something like 86�percent -- of the funding comes directly from students federal loan programs.
CAVANAUGH: Now, before we get into the some of the problems that you outline in your article, and I am speaking with [CHECK] let's talk about how bridge point education has made itself known here in San Diego. The various sponsorships they have been engaged in, and how they're gotten into the business community here in San Diego. Liam?
DILLON: Sure, well, they -- it's sort of the most prominent things they've done is they sponsored the holiday bowl college football game. And they're doing that through 2012. They sponsored the San Diego symphony summer pop series, and they've also really made themselves known in a number of charitable causes, the monarch school, and businessmen in the city that I've spoken to really love these guys. They say, look, these guys don't have to be here, but they're here, and [CHECK] at a time when charters really need it with the economic situation as it is.
CAVANAUGH: And so a major star in -- new star in the business community here in San Diego, but there are some problems the (with bridge point as you put it in your article is they seem to have a remarkable ability to attract students but a remarkable failure to graduate them. The senate also seems concern body this dropout rate, and will, tell us about that.
CARLESS: Yeah, they've come under quite a lot of fire, apart from the three [CHECK] they have been investigated by the Department of Education, the Department of Education, they released an audit haft year which is had several critical things to say against them, primarily, the main thing the Department of Education was concerned about was the way that they pay their staff. So basically you're not allowed, really, under federal law to pay your staff in this, you upon, in this based on how many people they recruit, and the -- findings were that Bridgepoint was doing exactly that, an enhanced system of compensation where the number of people you got in, the number of people you signed up to do courses of direct correlated with how much you and ended up getting paid in your pay packet. And then of course they've come under fire from the senate from, from a senator in Iowa, who has been very critical of their dropout rate. And it's important to stress that the only real data that we have on their dropout rates, because it's kind of complicated to figure out, but the senator went out and did an analysis of something like 9000 bridge point students and said, where are these students now? And found that 86�percent of them had dropped out within, I think it's four years.
DILLON: I believe it was just over two years.
CARLESS: Over two years, yeah.
CAVANAUGH: Yeah. And does -- okay, so say somebody signs up, gets a call to become a student at bridge point, and they sign up, and they get a federal student loan, and they can't do the course work, and they drop out within 12 to 18�months, let's say. And brim point get to keep that money from the federal government?
CARLESS: Absolutely, yes.
DILLON: The federal government would be the one that's on the hook. If the student defaults, if the student is unable to pay that loan. The federal government would be responsible for it.
CARLESS: The fax payers, yeah.
CAVANAUGH: So in other words, a student can't just put up their hands and say, look, I'm not gonna be paying. They are on the hook to pay this federal student loan.
DILLON: Correct, yeah.
CARLESS: That's one quit distinction which is that they have to attend a certain number of courses benefit bridge point gets the money, basically. They have to -- I think they have to be in there for at least four weeks, and then the privilege point can actually gain access to the federal funding, it goes into their bank account, basically. One of the criticisms that has been levied at this company is they're very, very good at holding students' hands and keeping them in their courses, and encouraging them for the first four week, and then once they get that money, this is the criticism that's out there, once they get this money, that suddenly the support for students falls off into the ether, and these students then start failing and dropping out.
DILLON: It's critical to note that these student loan debts are not dischargeable, bankers fees, [CHECK] these things hang with you forever.
CARLESS: You're stuck it.
CAVANAUGH: So either the student is on the hook for them, or if the student defaults and that goes against their credit, and the federal government is stuck with it, but then bridge point gets the money.
CAVANAUGH: [CHECK] the company declined but I would like to introduce a third guest, Brian Moran is here, he is the executive vice president for the association of college and universities, basically for profit colleges and universities, and good morning, Brian.
MORAN: Good morning to you all.
CAVANAUGH: Now, I know Brian that you cannot comment specifically on bridge point, which is what we're talking about, but I would like to get a little bit of background on for profit colleges and universities, on line that offer on line courses. Is that a -- that 80�percent dropout rate, would that be considered high?
MORAN: Well, one, I wouldn't agree there is an 80�percent dropout rate. The -- I'm not sure where those numbers are coming from, but on line education is the future in education. Studies now indicate that one in four students in all of higher education are taking at least one on line course. And I think Bridgepoint and other schools have done is get ahead of the curve. They have been offering on line education, and students are clamoring for it of the that's why you've seen such an enormous increase in the enrollment, is because this is the -- this is the wave of the future, and in -- for profit colleges and universities have got out in front. A number of traditional schools are offering it as well, and I suspect those enrollments will increase, but it's the way students learn now.
CAVANAUGH: So, yeah, that's what I what I was gonna ask you, Brian. So what gap do you see that the -- especially the on line for profit higher education, what kind of student does that target?
MORAN: Yeah, well, the student characteristics for most for profit colleges and universities are nontraditional student. We educate now between 10 to 12�percent of all higher ed. And the a nontraditional student, meaning little a student that has not matriculated through high school and gone to college like a terrible -- you go to four years of high school, you go in your four-year public or non-- private institution. This is someone that has returned to college or has tried a local community or even a traditional school and has not liked it, has gone back out into the work force, and now is returning to either increase their distill skills or find themselves unemployed, or find their job skills and respond to the changing work environment. And the knowledge based economy that we were -- we find ourselves in. So a number of these students are older, the TYPICAL age is 26 and 27, sometimes they're much older, and they possess what we refer to as risk factors, meaning this is someone who is financially dependent, well, or really independent, meaning if they don't have any family wealth.
CAVANAUGH: They don't have anything to fall back on.
MORAN: Yeah, the parents aren't there to afford the college. They're working part time or even full time in many cases.
CAVANAUGH: Will Carless would like to ask you a question.
CARLESS: Yeah, I just wanted to make one point, it's on this critical critical issue that's at the center of this controversy. Which is over the crop out rate, and you raised a good point which is yep where that 86�percent figure came from. Where that 86�percent figure came from was an analysis as a mentioned earlier that senator harkins committee did where they took 10000 students and they said where are these students now, and they found that 86�percent of them are dropped out. One of the big problems in this whole debate is that there isn't really any good data yet on what's happening on to These Days tens of thousands of people who are signing up. And I'd argue that the senator's data is one of the only decent studies we have out there, and the question for the for profit on line educators is very simple: If these figures aren't that high, you know where your students have gone. You know which ones have dropped out and how many of them are in there. And if these figures are misleading, if they're not true, if they're not true, very simply make that data available to us and shows that they're still there. And no one in that industry has been much to do yet. And I would argue they could do it very, very easy. 'Cause they know where the students ares, they know what the real figures are, and they could very easily make that data available to people like me, and we'd happily put that up on our website and bright our stories.
DILLON: Sure, that's fair. But unfortunately the senator has been less than transparent, he uses this term churn, frankly we don't know what he means by it. He's looking at over two years is what -- in term it is of degree granting, institutions. A lot of our schools provide certificates, less than 12�months issue in fact, that's one of the reasons our schools are so popular with a number of student system we have accelerated programs, which is something that this administration has recognized that is concerning more innovation flexibility, and accelerated programs so you can obdane a two-year degree in 12�months.
CAVANAUGH and Brian, do you have go figures on those rates?
DILLON: We do. We have higher graduation rates, two-year programs we're at 60�percent, whereas your local community college is at two�percent. So our figures demonstrate a much higher rate than what the senator has mentioned in his hearings. And he's been a little less than transparent in terms of what he means by this churn, how he's calculating it. Our figures tell us 60�percent of those in two-year institutions are graduating.
CAVANAUGH: So that would be 40�percent that don't.
MORAN: Right, which compares very well to other two-year institutions though, when you're comparing apples to apples, we do very well.
CARLESS: Bridge -- can I just make a point? Bridge point education spent a lot of money and a lot of time putting up a whole website that they put up in response to [CHECK] and in the interests of everyone going on and checking it out, I think it's BPI transparency.com right?
DILLON: Correct. They made a point that they're trying to be as transparent as possible.
CARLESS: Exactly. And nowhere in that website does it say wee got a secretary percent graduation rate, and I know, Brian, you're talking about the industry on a whole. But it seems kind of lopsided to criticize the senator's figures which only -- which represent one company, and then say, well, that's not true across the industry, and sort of compare it to industry wide -- I've never seen that 60�percent rate. I don't know with where it comes from.
MORAN: It comes from the Department of Education. And we rely on the Department of Education. And those are their figures.
CAVANAUGH: Brian, let me ask you one question --
MORAN: Over 1700 schools, rather than just talking about one.
MORAN: I'm sure bridge point is able to, you know, present their figures and --
CARLESS: They haven't yet.
MORAN: Well --
CARLESS: They haven't yet. I mean, we're waiting to see them. They know where their students are, they know how many have dropped out, and all they need to do is put it on their website.
CAVANAUGH: Let me ask you one question, Brian, if I may, before I let you go. And that is another criticism that has been made in the fiduciary profit higher education business, all across the board, is about the tuition rates. How do tuition rates for for profit universities compare to private universities?
MORAN: They're very similar. And it's a matter of cost versus price of the cost of education is very much the same. Where it's a for profit or nonprofit. The cost of providing that education to the student is the same. The price is different because we are not subsidized. We do not receive either, you know, direct subsidies from the government. I know in most states higher education is probably the third or second to third highest.
CARLESS: Where's for profit companies get more than 80�percent of their funding from the federal government.
DILLON: Come on, you don't come to the chart comparing apples and oranges here.
CARLESS: Federal loans aren't federal subsidies?
DILLON: We do not receive any federal subsidies. [CHECK] down the street. They don't provide tuition subsidies.
CARLESS: You just get 80�percent of your money from the federal government.
DILLON: No, as you already said in your comments issue those loans are repaid because the student's on the hook for them. So the tax papers are not on the hook for them, those are loans.
CAVANAUGH: Brian, I want to wrap it up with my guests here, but I really appreciate your taking the time to speak with us this morning.
MORAN: These are important issues and with request best of your knowledge constraints, I think private colleges should be looked at as an opportunity for educating what is absolutely necessary now in this knowledge based economy for people to get jobs and for America to be competitive.
CAVANAUGH: Brian moran, thank you so much.
MORAN: Thank you. Bye-bye.
CAVANAUGH: Brian Moran, is the associate vice president [CHECK] let's bring it back to your article, and back to bridge point, they are under scrutiny, as you said, not only from the senator, but there are a number of lawsuits pending from [CHECK].
DILLON: Within days of each other in federal court related to former students who were upset with with sort of what they were promised and what they were delivered, basically, whether the education that they had literally purchased, you know, provided them enough opportunities and also there was a third suit, which is an employment suit from current and former employees who were upset with the way that they were sort of treated in the sense of federal labor laws related to over time and lunch writtenings and thins of that nature.
CAVANAUGH: So we've already made the point that there is no campus, there is no actual school here in San Diego. That are bridge point students can go to. So what actually happens in that big building on B street.
CARLESS: Well, wee never been inside there, but certainly the majority -- a large portion of this company's budget is spent on marketing, it's spent on hiring people to sit in cubicles and call people up, a calling list of people, people that might be interested. I spoke to a guy the other day who was on the military team, they have a team that is specifically geared to [CHECK] telemarketers, basically. You spoke to someone there.
DILLON: Yeah, there's one of the -- the head of the regional Chamber of Commerce, [CHECK] compare them to a giant call center of the so that's mainly what the folks in San Diego do.
CAVANAUGH: Now, there is the argument that since Bridgepoint has ingratiated itself to such an extent into the economy of San Diego, it is the 5th largest employer.
DILLON: Private employer.
CAVANAUGH: Private employer, sorry, in the City of San Diego, what happens if these lawsuits and these inquiries actually make a big dent in what bridge point is doing?
DILLON: Well, it's actually interesting because our stories layout the fact that a lot of what this company has been doing is [CHECK] is these same sort of groups, these regulators, these politicians are now taking aim at this place. And so it'll be interesting to see if some of of the stuff sticks, what effect that might have here locally. And will spoke with an economist who did, or a real stake analyst who did [CHECK] and presumably, the converse could happen. If these things turn out to be so detrimental to their business model, there might be a retraction in bridge point's business locally, [CHECK] such boom.
CAVANAUGH: Is this indeed a actually a move under way [CHECK].
CARLESS: There is. The Department of Education is working on some new rules that would have sort of impact on the industry. It's kind of hard to get into those. They're a lot bit complicated to explain. The senator is also started to talk about bringing legislation, it's unclear how much support he has on that. We're in a down economy, and here's an industry that's swelling, that's booming, that's creating jobs, that educating people, that's doing all of this stuff, and the regulation's far behind, and it's basically how they do that.
CAVANAUGH: I'm wondering, are you gonna be following up on this? Is there something coming out.
CARLESS: We were hoping to make a little pitch here, actually. We're trying to get in touch with as many current and former bridge point -- sorry, ash Ford education -- sorry, ash Ford education stunts, faculty, staff, [CHECK] we really want to hear from you. So please go on our website, find me, will Carlee, or Liam Dillon, or you can call our office, that's [CHECK] please give us a call, we want to hear your stories.
CAVANAUGH: I have a feeling you might hear from a few people.
DILLON: Thanks very much.
CAVANAUGH: [CHECK] I know there were several people who called you up, and we couldn't get your phone calls on the air. If you would like to comment, please request on line, KPBS.org/These Days.
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