San Diego For-Profit Universities Making Tons of Money Handing Out Worthless Degrees

by on July 21, 2014 · 10 comments

in Business, Editor's Picks, Education, Government, Military

Ashford University and University of Phoenix Worst Offenders Targeting Returning Vets

amPhxMagBy John Lawrence

Everyone wants to better themselves, right, by getting a college education. Most of all the Iraq and Afghanistan vets transitioning into civilian life. To that end our politicians in Washington have crafted a GI Bill that allows them to do just that at taxpayer expense.

Problem is most of that money is being gobbled up by for-profit universities like the University of Phoenix and Ashford University which don’t even qualify for state financial aid. These universities attract and recruit students by advertising heavily and “selling” them on the value of one of their degrees.

When many of the students graduate, they can’t get a job based on a degree which potential employers say is worthless. And despite the GI bill, many of them take on additional student loan debt.

Investors looking to target the next profitable, gullible segment of the population have gone after those who think a college diploma will help them get ahead. They’ve advertised mightily and charged exorbitant tuition in order to get people, who have swallowed the conventional wisdom that a college degree is the be all and end all of the American Dream and of bettering one’s self, enrolled. And it’s a time proven adage that, if you want to make money, you have to advertise.

While traditional universities do little if anything in the way of advertising, for-profit universities advertise the hell out of their product – a college degree. You can sell anything from a proposition on the ballot (the Barrio Logan initiative that the Chamber of Commerce sold to San Diego) to politicians (those with the most ads win) to cars to peanut butter. Those without the money to do ads lose out whether they be products or politicians or ideas (British Petroleum really does care about the environment). The American unsophisticated public falls for the ads every time. This is why investors set out to sell the American public – especiallly returning GIs – on getting a college degree at their for-profit universities.

About a decade ago, a corporation called Bridgepoint Education Inc. purchased what was then called Franciscan University of the Prairies, a near-bankrupt, 300-student college located in Iowa that for decades had been run by a local order of Franciscan nuns.

The investor group, like several others, bought a nearly bankrupt college in order to get their legal accreditation status. That enabled Ashford’s students to tap federal financial aid dollars, the source of nearly 85 percent of the university’s revenues – more than $600 million in the last academic year. Ashford immediately moved most of its online operations to San Diego.

The football stadium in Clinton, Iowa goes unused since Ashford doesn’t even have a football team. They are all about using the capitalist system including mega advertising and IPOs to make profits. Incidentally, in 2009 Bridgepoint engineered an initial public stock offering that brought in $142 million. Not even Harvard or Stanford can say that.

ucsd vs phoenixAccording to Huffington Post:

Just as Wall Street managed to use simple things like home mortgages as raw material for complex and profitable investments, Bridgepoint has pulled off its own bit of alchemy here in Iowa: It has leveraged the purchase of a failing but accredited campus into a badge of authenticity for its entire sprawling operation — even as students have fared poorly, dropping out in large numbers and increasingly unable to pay back their federal debts.

The current scam involves duping returning GIs in order to capitalize on the Post 9/11 GI Bill. In July of 2008 that bill was signed into law, creating a new robust education benefits program rivaling the WWII Era GI Bill of Rights. Investors at for-profit universities like Ashford and University of Phoenix sensed a potential gold mine. The University of Phoenix’s San Diego campus has received over $95 million to educate returning vets since 2009, more money than the entire University of California system including all its extension programs has received.

The Center for Investigative Reporting (CIR) has concluded that the GI Bill which was designed to help veterans live the American Dream is instead supporting for-profit colleges that spend lavishly on marketing but can leave veterans with worthless degrees and few job prospects. One reason that the U of Phoenix has made so much money is that its degrees are so expensive.

An Associate’s degree costs about ten times what a similar degree at a community college (which doesn’t advertise) would cost. And taxpayers are picking up the bill for investor owned, for-profit colleges’ insatiable greed.

According to the CIR:

The University of Phoenix won’t say how many of its veterans graduate or find jobs, but the overall graduation rate at its San Diego campus is less than 15 percent, according to the U.S. Department of Education, and more than a quarter of students default on their loans within three years of leaving school.

Those figures fall short of the minimum standards set by the California Student Aid Commission, which dispenses state financial aid. The commission considers either a graduation rate lower than 30 percent or a loan default rate of more than 15.5 percent clear indicators of a substandard education.

No such restrictions govern GI Bill funds. And nearly 300 California schools that received GI Bill money either were barred from receiving state financial aid at least once in the past four years or operated without accreditation, CIR has found.

Part of the problem is that the American Dream, insofar as a college education is a part of it, has little more validity at this point than a Bronx cheer. The conventional wisdom is that a college education will help you get ahead. It’s just that not every college degree is worth the paper it’s written on.

Sure a college degree from Stanford or the University of California at San Diego may help you get ahead as long as it’s in the right fields. But college degrees from the likes of the University of Phoenix and Ashford University will likely hang on the wall while the graduate works his or her minimum wage job at McDonald’s or WalMart.

The University of Phoenix’s San Diego campus doesn’t even look like a college. It’s a few mid-rise office buildings in a suburban office park, indistinguishable from the life insurance company that occupies the glass-and-steel structure across the street.

Like all of the other campuses in this for-profit college chain, the buildings here are leased, not owned, so the parent corporation (the Apollo Group, Inc.) can quickly respond to changing market conditions. And the faculty have the status of temp workers. No instructor has tenure. The vast majority of them are part time. Since U of Phoenix is all about profit, they can be here today when the getting is good and gone tomorrow when the profits dry up.

Of the $1.5 billion in GI Bill funds spent on tuition and fees in California since 2009, CIR found that more than 40 percent – $638 million – went to schools that have failed the state financial aid standard at least once in the past four years. Four of those schools were University of Phoenix campuses, which together took in $225 million.

Among the others are massage schools, paralegal programs and auto repair academies. More than a third – 121 schools – have no academic accreditation, like the Institute for Advanced Study of Human Sexuality in San Francisco and the Pacific Coast Horseshoeing School in Amador County.

Some progressive Democrats in Washington have tried to tighten up the standards set forth in the GI Bill to no avail since the for-profit university lobbyists have been so successful at getting their way. In 2012, Iowa Sen. Tom Harkin issued a scathing 5,000-page report detailing the practices of 30 large for-profit education firms. But Republicans, who are all for profit making at the expense of everything else were not impressed.

indicators educationAccording to CIR:

Since the new GI Bill became law, the University of Phoenix’s corporate parent has spent $4.8 million on lobbying Congress, the White House and the federal VA, according to official lobbying records.

Bridgepoint Education, owner of the almost exclusively online Ashford University, has put $4.6 million toward lobbying; Corinthian Colleges Inc. spent $4.4 million. Education Management Corp. – which controls the for-profit schools South University, Brown Mackie College, Argosy University and the Art Institutes chain – spent $2.8 million.

So lobbying and advertising are the main educational tools that for-profit universities use to ensure that the profits keep coming even while gullible veterans and other American citizens are recruited by so-called advisors to pursue a “higher” education at the likes of Ashford University and the University of Phoenix. At the state level their lobbyists have also been successful. In California, legislation to prevent schools with low graduation rates and high student loan default rates from receiving GI Bill money was gutted of those measures.

At the San Diego campus of the University of Phoenix the overall graduation rate is less than 15%. More than a quarter of its students default on their student loans within three years of getting their worthless degrees. The defaults add huge amounts to their student loan debt which cannot be gotten out of by means of bankruptcy. Student loan debt now totaling over a trillion dollars nationwide will follow them the rest of their lives and even take a bite out of their social security payments when they’re old and gray.

California state legislators want for-profit colleges to tell them how many of the veterans graduate and how many find jobs they get based on their degrees. Needless to say lobbyists for the for-profit universities are fighting this every step of the way.

California Attorney General Kamala Harris is investigating Bridgepoint, parent corporation of Ashford University. SEC filings show that San Diego-based Bridgepoint Education spent $871 million on marketing and recruiting over the last three years and took in $336 million in profit. Combined, that was more than the firm spent on instruction.

The company has been accused of making false statements to students in order to get them to enroll. “As far as I’m concerned, Ashford committed fraud,” said Patrick Keane, a 20-year Navy veteran from Iowa who spent his GI Bill funds on a teaching program at the online college only to find no schools would recognize the degree.

High power recruitment techniques are used by so-called “enrollment advisers” whose main job is to get potential students to sign up. Former Marine Cpl. Moses Maddox said the University of Phoenix also targets veterans’ vulnerabilities. Maddox served in Iraq during the 2004 siege of Fallujah.

When he returned home, he went to work for the University of Phoenix’s parent company as a recruiter, calling up to 100 veterans a day. “My job was to assess their fear and then harp on that fear, capitalize on that fear and get them to buy,” said Maddox, 33. He said he was so disgusted by the company’s recruiting practices that he quit and rejoined the military for 16 months.

It’s safe to say that for-profit universities like Ashford and University of Phoenix are more interested in their bottom line profits than in their students’ educational and job prospects. They profit by capitalizing on the conventional wisdom that you need a college degree in order to get ahead and on selling a phony version of the American Dream.

avatar mike July 21, 2014 at 8:03 am

Saying they give out degrees gives them too much credit. Most of their students end up having to drop out after they realize they’ve been had or their financial aid is exhausted.

Call them what they are: Debt factories. The product they sell is debt and only that.

avatar bob dorn July 21, 2014 at 8:16 am

Thank you, John Lawrence. And to all you conservatives, you were right. Government is the enemy… of GIs. Nothing says it better than this quote:
“The University of Phoenix’s San Diego campus has received over $95 million to educate returning vets since 2009, more money than the entire University of California system including all its extension programs has received.”
For-profit universities are a breathtakingly audacious swindle.

avatar former staff July 21, 2014 at 9:57 am

Well just in the last 3 weeks Bridgepoint education (Ashford and University of the Rockies) reinstated a quota system at their call centers. The Dept. of Ed. said in the past they cant do.

avatar Goatskull July 21, 2014 at 12:41 pm

I think the TAP (Transition Assistance Program) classes need to mention to those who are going to separate from the military that these for profit schools for the most part are a complete waste. The post 9/11 GI bill not only pays for most of the curriculum but pays for the student’s housing (BAH; basic allowance for housing). If possible they should take advantage of that and go to a real accredited university or a reputable vocation program.

avatar Steve Greer July 21, 2014 at 1:07 pm

Thank you for writing this. This message needs to be shouted from the rooftops, especially to people in the armed services. It is my opinion that these “for profit” universities are unethical, and should be outlawed. In my opinion they are the new versions of the easy credit car dealers that used to be over in Point Loma in the 1970s and 80s, preying on the gullible sailors.

avatar Sharon July 21, 2014 at 1:47 pm

Employees of Bridgepoint Education/Ashford University receive free tuition. It is common for these employees/students to openly share coursework with each other. Ashford is a scam in my opinion and I worked there for 4 years.

avatar J.K. Cody July 21, 2014 at 8:32 pm

You need to add ITT Tech to these two nefarious so -called schools. As a former employee of this scam I saw marketing employees ordered to dress up in fake military uniforms when appointments for veterans were scheduled. AND this was ONLY 1 small bit of the massive fraud I saw while employed there.

Not only do students rarely graduate and end up leaving worse off than they were to begin with but the few who do manage to graduate do so with massive loads of debt because Federal loans are limited to aggregate at (at most) $56,500 (for independent students, dependent students amounts are lower). This amount is reached at roughly the second year of attendance at ITT Tech so students are FORCED to take out private loans with interest rates of 14 to 28%. At this level of interest which grows monthly, the interest quickly surpasses the principle amount borrowed and most students graduate with $75,000 to $100,000 in student debt; an insurmountable obstacle to any type of life after getting the worthless degree.

avatar Proof July 22, 2014 at 6:48 pm

My wife actually got her MA in Education with a Special Needs Emphasis from Ashford. It was the most convenient accredited program she could find and complete while staying home to take care of our first child. That degree is what helped her get the job she targeted at Rady Children’s Hospital as a special needs preschool teacher within the hospital’s autism inclusion program. She was in competition with other qualified candidates and actually was denied the same opportunity at that position when she had applied earlier with just her SDSU BA. So to say that these degrees are fake or a scam is completely unfounded and just down right false. People who drop out and flake on their commitment are usually the ones who end up in debt with a bad story. Ashford served it’s purpose for our family.

avatar Student July 24, 2014 at 11:06 am

I was a student at the University of Phoenix. I am also a Combat Veteran, and a single parent. I see articles like this, and all I see are comments from people that have never attended an online school, or know someone that tried it and didn’t finish for whatever reason. Some people should just stick to jazz.

If it wasn’t for the University of Phoenix, I wouldn’t have been able to finish my college degree. I didn’t have time to go to a state school. I work 40+ hrs a week, and have a child to take care of. I can’t speak for everyone else, but I know that, thanks to the University of Phoenix, I was able to finish my degree. And in doing so, many doors of opportunity have opened that wouldn’t have, had I not finished school. Thank you University of Phoenix for allowing me to finish my degree.

My letter is in reference is to this article. http://sandiegofreepress.org/2014/07/san-diego-for-profit-universities-making-tons-of-money-handing-out-worthless-degrees/#.U88v5P1G7oY

I like the picture that was used…. That picture is ME!

avatar Chris July 30, 2014 at 11:58 am

As a taxpayer, it disgusts me that $16.6 MILLION was spent on lobbying (according to above) AND another $871 Million by U. of Phoenix parent company alone — of our tax dollars! More money, in that case, than was spent on instruction! Almost a BILLION dollars…. And, for what? Useless degrees?

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