Following a two-year investigation of the for-profit higher-education industry, Senator Tom Harkin, D-Iowa, released a detailed report revealing the business practices of 30 education companies including Ashford University’s parent company Bridgepoint Education.
The report alleges some scathing claims about Bridgepoint including that in 2010 the company spent a larger proportion (29.7 percent) of its revenue on marketing than any other publicly traded education company, had the highest withdrawal rates of any Associate’s Degree program from an education company and employed more than four times the amount of recruiters as it did student services employees.
The investigation was completed by the majority Senate Committee on Health, Education, Labor, and Pensions, which is chaired by Harkin. Harkin, whose wife sits on the Board of Regents for the State of Iowa, a group of nine citizens who govern five public educational institutions in the state, has been critical of Bridgepoint Education in the past. In 2011 Harkin called the education company “a scam.”
The minority members of the committee admonished the majority for being unwilling to work together with the minority, failure to provide proper context for the findings of the report, mischaracterizing findings, drafting witness testimony and including previously discredited testimony.
“The overall accuracy and validity of the information contained in the Majority Staff Report is in doubt and should not be used as the basis for any legislative action by the committee,” the minority states.
The report, which is composed of hundreds of pages of research based on internal communications and statistics from the various education companies as well as testimony from former employees and students, claims the federal government has not done enough to protect students and the billions of taxpayer dollars that the for-profit education companies receive despite their alarming drop-out rates.
“Federal law and regulations currently do not align the incentives of for-profit colleges so that the colleges succeed financially when students succeed,” the report states. “In the absence of significant reforms that align the incentives of for-profit colleges to ensure colleges succeed financially only when students also succeed, and ensure that taxpayer dollars are used to further the educational mission of the colleges, the sector will continue to turn out hundreds of thousands of students with debt but no degree, and taxpayers will see little return on their investment.”
According to the report, in 2010, Bridgepoint Education received 93.7 percent, $547 million, of its revenue from federal funds, including federal financial aid, departments of defense and veteran affairs funds.
The report raises concerns about how these federal dollars are being spent. Based on figures from 2009 and 2010, Bridgepoint spent a higher proportion of its revenue on marketing than any other publicly traded education company. The report also states, Bridgepoint spent $1,212 per student on instruction in 2009, compared to $2,604 on marketing per student and $1,460 on profit per student. It also states in 2010, with 77,179 students, Bridgepoint employed 1,703 recruiters, one career services employee, and 386 student services employees
The large portion of funds allocated to marketing rather than student retention could be the cause of high drop-out rates unveiled in the report.
“Bridgepoint’s Associate withdrawal rate was the worst of any company examined by the HELP Committee, more than 14 percent higher than the next highest college. The company also has the fourth worst Bachelor’s degree withdrawal rate of any company examined,” the report states.
The report also takes aim at the high cost of tuition for for-profit universities as well as their aggressive recruiting techniques. One complaint included in the report from a military veteran claims he was repeatedly told by Ashford recruiters that his post-9/11 GI bill benefits would cover the entire cost of his degree, only to find out after he was enrolled that he would owe approximately $11,000 to Ashford that his benefits did not cover.
The investigation for the report was completed in 2008, before the ban barring universities from paying recruiters based on the number of students enrolled went into effect in July 2011.
“In theory, for-profit colleges should be well-equipped to meet the needs of non-traditional students. They offer the convenience of nearby campus and online locations, a structured approach to coursework and the flexibility to stop and start classes quickly and easily...But for-profit colleges also ask students with modest financial resources to take a big risk by enrolling in high-tuition schools,” the report states.
According to figures revealed in the report, a Bachelor’s degree in business administration at Ashford University Online costs $53,680 while the same degree at the University of Iowa costs $43,816. However, this does not take into account scholarships, tuition waivers or other financial assistance offered by the universities.
“While aggressive recruiting and high cost programs might be less problematic if students were receiving promised educational outcomes, committee staff analysis showed that tremendous numbers of students are leaving for-profit colleges without a degree. Because 98 percent of students who enroll in a two-year degree program, and 96 percent who enroll in a four-year degree program at a for-profit college take out loans, hundreds of thousands of students are leaving for-profit colleges with debt but no diploma or degree each year,” the report states.
“Taken together, these issues cast serious doubt on the notion that Bridgepoint’s students are receiving an education that affords them adequate value, and calls into question the $1.2 billion investment American taxpayers made in the company in 2010,” the report concludes.
In Bridgepoint’s response, the company said it expected, along with Ashford specifically, to be named in the report. It then decries Harkin’s continued scrutiny.
“We...recognized that the information we provided would be open to misinterpretation and misstatement and, unfortunately, those fears were well founded. The report — yet another attack against for-profit institutions of higher education by Senator Harkin — contains statements about Ashford University, Bridgepoint Education, and the entire sector that range from misleading to completely false,” the release said.
The Bridgepoint statement goes on to say, ““The report continues in Senator Harkin’s well-worn tradition of ideology-driven propaganda, completely overriding reality. The report twists the facts to fit a narrative, proving that this is nothing more than a continued political attack on the for-profit higher education sector. Instead of contributing to the conversation about making higher education more readily available, Senator Harkin is condemning schools and universities that are currently providing instruction to nearly four million of our nation’s students.”
The Association of Private Sector Colleges and Universities, a lobbying group, also issued a statement from APSCU President and former Congressman Steve Gunderson criticizing Harkin’s report and focus on the for-profit education industry.
“Instead of joining the conversation about ways to expand access to postsecondary education, Senator Harkin is attacking schools that are currently providing instruction to 3.8 million students. Today's students already face enough challenges accessing postsecondary education without these sorts of distractions.”
Bridgepoint Education has grown exponentially from when it purchased Franciscan University in 2005. In fall 2005, Bridgepoint, including Ashford and University of the Rockies, enrolled 968 students. As of March 2012, the company enrolled approximately 95,000. Only 1 percent of those students attend the brick and mortar campus in Clinton.
The report comes weeks after a slew of other hardships for Bridgepoint Education. In addition to being denied accreditation by the Western Association of the Schools and Colleges, Ashford University was placed on “special monitoring status” by its current accrediting body, the Higher Learning Commission. Bridgepoint is also facing class-action lawsuits in the wake of Ashford’s accreditation woes.