For-profit colleges have really taken it on the chin this week. One of the biggest names in the for-profit education business has come under scrutiny for questionable business practices. Today's weekly new roundup features a survey of the latest news on for-profits struggle against federal regulations:
An article in the March 11, 2011 edition of The New York Times reports that a cloud of suspicion looms over Ashford University and its parent company Bridgepoint as a consequence of their dubious business practices. The article reveals that for investors "it was an impressive story: Bridgepoint Education used seed money from Warburg Pincus in 2005 to buy a struggling religious college with 300 students in Clinton, Iowa, and turned it into an online behemoth with 78,000 students and $215 million in profits last year."
The numbers Ashford has put up do indeed impress, but it seems that Fortune's wheel has begun to turn. The legend of Ashford University's success, which has since begun to be studied critically by the Senate Health, Education, Labor and Pensions Committee, "is presented as a case study in how a for-profit higher education company can put profits ahead of education," the Times article continues, "and how poorly the accreditors are keeping up with the rapidly expanding industry."
In other news: Via Bloomberg Businessweek comes a March 10, 2011 AP story on the jeopardy faced by for-profit colleges with respect to California higher-education grants. For-profits may lose their eligibility under new rules being considered by California state lawmakers. The AP article reports that the "measure would bar schools with high student loan default rates from being eligible for the state's Cal Grants financial aid program.... The new rules aim to save the state money and [according to a spokesman for Senate President Pro Tem Darrell Steinberg] 'protect students from graduating from institutions with excessive loan debt they're not able to pay off.'"
The for-profit education sector may find itself under attack, but it's taking the fight to its attackers. On March 10, 2011 The Huffington Post reported that proposed regulations have led to a "lobbying surge" by the for-profit college industry. The HuffPo piece reports that the "subject of the lobbying fight is a proposed rule by the Department of Education aimed at stemming a growing student debt and default problem in the industry."
For-profits have also initiated a grass-roots effort aimed at stopping the proposed regulations. "Much of the for-profit college industry's grassroots efforts have revolved around a letter writing campaign by students and faculty to demand that the comment period for the rules remain open beyond the proposed closing date and that the proposal be be rescinded,” the HuffPo article continues. “A massive deluge of letters succeeded in getting the Department of Education to extend the comment period.”
The battle continues to rage between the for-profits and regulatory agencies. If anything, these struggles represent the growing pangs of a young industry vital to the U.S. economy. If the leading for-profits are forced to close their doors, new institutions will have to fill the breach in order to ensure that thousands upon thousands of nontraditional students receive the educations they need to stay competitive in the current economy.