Oh, how the mighty have fallen. Or one could say another sad and sordid chapter in the history of America’s Finest City is ending. Yet another would-be business wunderkind has left its stain on the soul of the city.
California Attorney General Xavier Becerra has filed suit against Ashford University and its owner Bridgepoint Education alleging the company misled thousands of low-income students into enrolling and taking on student debt.
Just a few years back, Bridgepoint Education was San Diego’s fifth largest private employer. The corporate logo, displayed in huge white letters at the top of the downtown high-rise (now housing the San Diego Union-Tribune) was a symbol of civic pride. Its executives were active with the San Diego Regional Chamber of Commerce, the Economic Development Corp., the Downtown San Diego Partnership and the San Diego County Taxpayers Association.
The Holiday Bowl college football game carried its brand. The San Diego Symphony’s Summer Pops series was sponsored by the company. It was an early sponsor for Voice of San Diego/NBC 7’s reporting partnership.
Local politicians found the company to be a ready source of campaign contributions. Its lobbyists worked city hall, unsuccessfully opposing construction of a permanent homeless shelter near its headquarters, and supporting the campaign to making the city of San Diego’s “strong mayor” form of government permanent.
Bridgepoint’s downturn began when Iowa Democratic Senator Tom Harkin held a committee hearing examining the company’s business practices. Ashford University, based in Harkin’s home state, was the vehicle purchased by the for-profit company to gain accreditation as it pitched students nationwide seeking online degrees.
Iowa’s attorney general launched an investigation of the company’s business practices. Lawsuits were filed in San Diego, with former students and employees of Bridgepoint have accused the company of fraud.
Critics over the years have faulted the institution’s significant dropout rates, high-pressure sales tactics, and misrepresentations of job prospects. Enrollment declined from just short of 90,000 students in 2012 to a current estimate of 41,300.
The California Attorney General’s lawsuit received nationwide coverage on Wednesday. Bridgepoint issued statements to the press promising to:
“vigorously defend this case. We look forward to sharing the facts and success stories of our students and our school, because we’re proud of our work and confident that we’ll be fully vindicated.”
Things don’t look too good for Bridgepoint.
From the Los Angeles Times:
Although Bridgepoint Education is based in San Diego, Ashford enrolled students across the U.S. According to the Chronicle (of Higher Education), Bridgepoint is also under investigation by attorneys general in New York and North Carolina.
Speaking on the campus of San Francisco State University, Becerra noted that unlike the brick-and-mortar state school, Ashford University doesn’t have libraries, laboratories or classrooms. And yet, he said, it charges students considerably more — about $60,390, according to the lawsuit, for an online bachelor’s degree.
Most of its students do not graduate and those who do often emerge saddled with debt and unable to find employment in the field related to their degree, according to the lawsuit . Becerra said the median student loan debt of an Ashford graduate is $34,000.
The lawsuit’s premise runs counter to Trump era policies on for-profit educational institutions. The federal Consumer Financial Protection Bureau, which ordered Bridgepoint to refund and forgive $23.5 million in private loans made to students, is in the process of being gutted. The Justice Department’s investigation of whether the company violated the “90/10 rule, ” barring for-profit colleges from getting more than 90 percent of their revenue from federally backed student loans is no longer a priority under AG Sessions.
From Buzzfeed News:
Liberal states are taking up the mantle of regulating and targeting for-profit colleges as the Trump administration signals a desire to ease up on the industry. On the federal level, Education Secretary Betsy DeVos has promised to roll back and replace Obama-era regulations of for-profit colleges. A top DeVos official, Robert Eitel, is currently on unpaid leave from Bridgepoint, where he worked as chief compliance officer.
“Ashford University preyed on veterans and people of modest means,” said California Attorney General Xavier Becerra in a statement. “This for-profit college illegally misled students about their educational prospects and unfairly saddled them with debt.”
The allegations in the lawsuit are troubling, to say the least:
From The Washington Post:
Ashford administrators were allegedly aware of counselors making false promises to prospective students, but failed to address the systemic problem or discipline offenders.
Its own internal reports identified hundreds of misrepresentations a month based on audits of fewer than 5 percent of each counselor’s calls. One admissions counselor was flagged for 25 violations over eight months, including repeatedly misleading people about financial aid and costs of attending, but received only a written warning, according to the complaint.
Prosecutors say this behavior resulted in students being saddled with tuition expenses and other debts they could not afford — costs they would not have agreed to had they known the truth. When students fell behind on those debts, Ashford used abusive tactics to collect, according to the complaint. Ashford allegedly charged or threatened to charge illegal debt collection fees and imposed unlawful fees for bounced checks.
From the Union-Tribune:
According to Becerra’s complaint, some 68 percent of the students received federal student aid, while most never graduate.
And while Ashford touts the university’s affordability, its online programs can cost much more than other alternatives, including public universities, the lawsuit maintains.
Online bachelors degrees at Ashford are currently expected to cost more than $60,000, including tuition, fees, books and supplies, according to the suit. In contrast, a four-year degree for a California resident attending San Diego State University is under $36,000, the suit says.
Becerra’s lawsuit comes after years of warnings about Bridgepoint’s business practices.
In 2011, Will Carless at Voice of San Diego noted the company was becoming a significant local player and –possibly– headed for trouble:
Bridgepoint’s enrollment soared 517 percent between 2007 and 2010. As of December, 77,892 students were enrolled at one of Bridgepoint’s two schools, but only 859 of them studied on-campus. The company now offers more than 1,345 courses in 71 bachelor’s and post-graduate degree programs, and students can study anything from accounting to journalism to social science.
The disparity of tens of thousands of students enrolling at a small college in Iowa whose campus they’ll likely never see prompted the Huffington Post to dub Ashford, the “Potemkin University.”
While its enrollment swelled online, Bridgepoint made its corporate presence felt in San Diego.
In 2012, some guy named Doug Porter at the nascent San Diego Free Press was critical of local media reports on the company’s early troubles:
…missing is any sense of the tragic impact that the economic model used by Ashford/Bridgepoint has and is having on the lives of both the students who are lured by its promises of opportunity and the former employees who have been cast aside. I’ve found an excellent account (read it here!) written by a former Bridgepoint employee that describes the moral bankruptcy driving this darling of the local business and political establishment.
In keeping with the long tradition by the San Diego news media, a warm, fuzzy blanket is being wrapped around a major “beloved” player in the local economy so that the public awareness will be shielded from the consequences of reprehensible corporate behavior and the complacency of elected officials that allows that conduct to continue unabated.
The aftermath of past corporate disintegrations brought on by unsustainable business models (or a legal/quasi-legal ponzi scheme, as I like to call it) has been a sort of local amnesia, followed by admonitions that “too much regulation” is bad for business. At the bottom of this well of malevolent corporate behavior is the ultimate reality that we citizens will get stuck with the bill for damages while most of its perpetrators will walk away unscathed.
And in 2014, John Lawrence wrote in the San Diego Free Press about the devastating effect for-profit colleges like Bridgepoint and U of Phoenix were having on veterans returning from Iraq and Afghanistan:
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 – especially returning GIs – on getting a college degree at their for-profit universities.
The for-profit sector of education will likely see a brighter future under the Trump administration, especially since it does away with the ‘frills’ of including a broader view of the world as part of getting a degree.
And, of course, since college in the libertarian world would be commodified, the product can be shaped (along with the crushing debts incurred) to produce a more subservient population.
Let’s hope Attorney General Xavier Becerra’s lawsuit serves as a bulwark against the spread of this sort of ‘education’ in California.
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