July 11, 2012- One of San Diego’s largest employers is headed for financial and legal troubles that could have a serious impact on the region. Bridgepoint Education took a bath in the stock market Monday, losing one third of its value and continuing downward on Tuesday. Over the past year the company’s stock price has dropped by more than 50%. This week’s sharp drop in value at the stock exchange happened after its flagship school, Ashford University, was denied accreditation by the Western Association of Schools. The upshot of this ruling is that the company will need to relocate hundreds, perhaps even thousands, of employees out of the San Diego region.
The for profit education company depends on the status of the Ashford campus to give it credibility with its on-line students, who make up 99% of its enrollment, and the financial organizations that loan them money for tuition. Standing in the way of certification is Bridgepoint’s drop out rate; of the nearly quarter million students enrolled over the past four years (2007-2011), 127,879 withdrew from the school. Also troubling for the Western Association was the fact that the school spends 31% of its operating costs on recruitment, well above the amount it spends on actual instruction or student services like job counseling. Just 22% of Ashford students graduate; the actual campus in Iowa has a mere 1,000 students taking classes, 85,000 are studying online.
Bridgepoint depends on student loans for its cash flow, and losing accreditation ultimately could mean that the school’s income would wither away. For the moment, it’s banking on Ashford University’s accreditation via the Higher Learning Committee of the North Central Association of Schools and Colleges. That certification is endangered due the fact that most of the company operations take place outside the Midwest; they’ve been given a deadline of December 1st before the North Central Association begins the process of reconsidering the University’s status. With 85% of its $933 million in revenue coming from federal student aid, the stakes are very high for Bridgepoint.
The university’s operations generate more than $1 billion for the regions’ economy, according a study published earlier this year. It is San Diego’s ninth largest employer and maintains a high profile throughout the region. Bridgepoint and other for-profit learning enters were the subject of Congressional hearings in 2011 that spotlighted high drop out rates, questionable recruiting practices and high levels of federal student loan defaults in the industry. Regulations aimed at colleges with excessive default rates (either exceeding 40 percent in the latest year, or 25 percent for three consecutive years) will cause them to lose their eligibility for federal student aid programs in the not-so-distant future.
Research has found that for-profit students make up about half of all student loan defaults, even though they make up about 12 percent of the general student population. A statistical analysis of for-profit college students indicates that they make significantly less than students who attend comparable nonprofit schools. The study, filed with the National Bureau of Economic Research, found that “income in 2009 is approximately $5,500 lower for students starting at for-profit institutions than for students starting at not-for-profit/public institutions.” And student loans, both federal and private, are exempt from bankruptcy.
Americans now owe more than $1 trillion in student loans, 511% more than was owned in 1999, and exceeding the total national credit card debt. By 2020, student loan debts will surpass Gross Domestic Product (GDP) of Germany. Over 14% of past loans are past due, with $85 billion in unpaid balances. By 2030, at the present rate of growth, student loans will exceed $16.746 billion, more than the national debt of the United States. There is real concern among some economists and financial institutions that student loan debt is the next bubble that could burst. For Bridgepoint and similar institutions that scenario would mean financial doom. And San Diego will be left with a big hole in the heart of its economy, just like it was 40 years ago when C. Arnholt Smith’s empire collapsed.
Here are some schools that won’t be closing… Eight campuses in the San Diego Unified School District that were slated to close next year have been spared the axe. On Tuesday the Board of Trustees halted the closure process. There is no word yet on how the District plans to find another way to come up with $4 million that closing the schools would have saved. SDUSD faces a deficit projected to hit $92 million by the 2013-14 academic year.
Here are some teachers that won’t be coming back to San Diego schools… The Breakfast Club, a reform caucus within the SDEA (Teachers Union), has learned that eighty three K-12 educators who thought they were coming back will not be recalled unless an equal number of more senior teachers decide not to come back. These eighty three teachers are in addition to the forty Early Childhood Educators who are also not planned for recall under the concessions made by the union in its negotiations with the School Board. They point out that SDEA members who said they were voting “yes” on the concessions, were very clear that they thought their vote was going to bring back ALL of the teachers, nurses, and counselors who were laid off this year.
Mitt Romney’s going to woo some black people… The Presidential candidate is speaking before the NAACP convention today at its annual convention in Houston, Texas. Benjamin Todd Jealous, the president of the, the 103-year-old group, says that Mitt Romney’s message on job growth “isn’t resonating with our base”.
The NAACP is concerned about the wave of mostly GOP sponsored voter identification laws. “We are living through the greatest wave of legislative assaults on voting rights in more than a century,” Mr. Jealous said Monday in his opening speech at the convention. “In the past year, more states have passed more laws pushing more voters out of the ballot box than at any time since the rise of Jim Crow.”
Even though Romney has been endorsed by Donald Trump, who says he has a great relationship with, you know, “the blacks”, facing this particular convention promises to be a real challenge. We’ll be watching. It should be very entertaining.
A bo-vine experience?.. The Independent, a British newspaper, reports that in southern France some farmers are now feeding wine to their beef cattle on the principle that if French beef tastes good now, it can only improve with a bottle of Saint-Geniès des Mourgues. Food science specialists in France say that, while wine may seem like a different approach to the usual bovine diet, the ruminants metabolize alcohol without much difficulty. The founder of the “Vinbovin” brand in the region, Jean-Charles Tastavy, has said the animals can consume up to a liter and a half per day, a quantity he compares to two or three glasses for humans.
Fast factoid…. In 2011, Americans were more likely to die by being crushed by their own TV sets than at the hands of terrorists.
On This Day… In 1804 the United States’ first secretary of the treasury, Alexander Hamilton, was killed by Vice President Aaron Burr in a duel. In 1969 David Bowie’s “Space Oddyssey” single was released in the U.K. In 1977 the Medal of Freedom was awarded posthumously to Rev. Martin Luther King Jr. in a White House ceremony.
Eat Fresh! Today’s Farmers’ Markets: Carlsbad (Roosevelt St. btw Grand Ave. & Carlsbad Village Dr.) 1 – 5 pm, Encinitas Station (Corner of E Street & Vulcan in parking lot B) 5 – 8 pm, Mission Hills (Falcon St. btw West Washington & Ft. Stockton) 3 – 7 pm, North San Diego at Sikes Adobe Farmstead (I-15 at Via Rancho Parkway. 12655 Sunset Dr., Escondido.) 11 am – 2 pm, Ocean Beach (4900 block of Newport Ave. btw Cable & Bacon Sts.) 4 – 8 pm, San Marcos – Cal State San Marcos (333 S. Twin Oaks Valley Rd., Parking Lot B) 3 – 7 pm,Santee (10445 Mission Gorge Rd. abandoned school parking lot) 3 –7 pm, Temecula (40820 Winchester Rd. Promenade Mall, parking lot btw Macy’s & Penny’s) 9 am – 1 pm
I read the Daily Fishwrap(s) so you don’t have to… Catch “the Starting Line” Monday thru Friday right here at San Diego Free Press (dot) org. Send your hate mail and ideas to DougPorter@SanDiegoFreePress.
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