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More Than Bridgepoint on Trial

March 11, 2011

WASHINGTON -- Given how the latest in U.S. Senator Tom Harkin's series of hearings on for-profit higher education unfolded on Thursday, Andrew S. Clark, CEO of Bridgepoint Education, Inc., had to be glad that he and his lawyers decided he shouldn't appear at the session, which focused on the exploits of his publicly traded company.

Sylvia Manning, president of the regional agency that accredited Bridgepoint's Ashford University, probably wishes she too had found an excuse not to attend.

The hearing before the Senate Committee on Health, Education, Labor and Pensions was framed as a "case study" of how for-profit colleges have embraced online education to fuel explosive growth and drive large profits, and Bridgepoint (the case study, in absentia) and for-profit colleges in general took a lot of hits from Harkin. He at one point called Bridgepoint "a scam, an absolute scam."

But while the career colleges were Harkin's primary targets, as they have been throughout his yearlong examination, accrediting agencies and, to a lesser degree, state and federal governments, absorbed plenty of collateral damage. Harkin, for one, made it clear that he believes many accreditors lack the expertise to keep tabs on the increasingly complex operations of the biggest for-profit colleges, and warned that "something has got to change" if the agencies -- as the federal government's subcontractor on assessing institutional quality -- are to continue to grant colleges access to federal financial aid.

“Many of these for-profit education companies are becoming multi-state corporations, and their main focus is becoming their bottom line rather than their students,” the Iowa senator said during an exchange with Manning. “The question I would ask is, in their current state, are our accreditation agencies equipped to oversee billion-dollar, multi-state corporations?” As is common on Capitol Hill, he didn't wait for her answer, providing his own: "I don't think so. I don't think the accrediting agencies have the wherewithal."

Thursday's hearing, the fourth Harkin has sponsored before the committee, was fully his show, and throughout much of the nearly three-hour proceeding, he was the sole member of the panel in the chamber. Three other Democrats joined him briefly near the end to ask a few questions each, and two Republicans (Wyoming's Michael B. Enzi, Harkin's counterpart, and Georgia's Johnny Isakson) made brief appearances, but more or less only to denounce the hearing as "an agenda-driven rush to judgment,” as Enzi called it. He described Harkin's for-profit hearings as the "most biased and poorly executed hearings in my nearly 15 years in the Senate.”

Then, for effect, he walked out of the room.

Clark, the CEO of Bridgepoint, never walked in, having sent Harkin a letter Monday saying that he could not accept the committee's invitation to speak. (While Harkin, as a committee chairman, has subpoena power, he opted not to use it.) Bridgepoint noted in its announcement Thursday morning that the Education Department's Federal Student Aid office is now reviewing the highly critical audit of Ashford that the agency's inspector general released in January.

"To preserve its right to due process and avoid compromising the integrity" of the department's review of Ashford, the company said, "Bridgepoint Education could not make individuals available or respond publicly to questions concerning a matter in which it is engaged in non-public discussions and negotiations with FSA."

Harkin appeared miffed at Clark's no-show, given that the committee had rescheduled the hearing from an earlier date at Bridgepoint's request, the senator said. (Although it is a time-honored Congressional tradition to set out an empty chair for no-show witnesses, Harkin's aides did not.)

The Bridgepoint executive wouldn't have liked what he heard had he come. (The numerous for-profit college lobbyists in the hearing room grimaced frequently.) Harkin, in what he acknowledged to be an unusually long opening statement, laid out an extended critique of how Bridgepoint (with its Wall Street financial backer, Warburg Pincus, and the approval of its regional accreditor) had transformed a failing Iowa college called the Franciscan University of the Prairies into Ashford University, with more than 75,000 online students.

Peppering his speech with words like "scam" and "unconscionable," and presenting a series of charts with data showing the company's stunning growth, soaring profits (from $33 million in 2008 to $216 million in 2010), richly compensated officials, heavy reliance on federal student and military aid, and escalating default rates, Harkin blasted Bridgepoint/Ashford -- and suggested that it was reflective of its for-profit peers.

“Data reviewed by this Committee paints a picture of a company -- and perhaps an industry -- that is premised on aggressively recruiting largely low-income, disadvantaged students ... collecting their federal grants and loans even as the vast majority of students drop out ... and lavishly rewarding executives and shareholders with mostly taxpayer dollars," he said. “From a strictly business perspective, this is a highly successful model. But, I must say, from an educational perspective -- and, frankly, from an ethical perspective -- it is deeply disturbing model."

Without Clark or anyone else around to represent Bridgepoint, the hearing was decidedly one-sided. Witnesses included the Education Department's inspector general, Kathleen S. Tighe, describing the findings of her office's critical audit of Ashford, and a retired state official from Iowa whose office had shut down Ashford's master's in teaching program.

But in the hot seat in Clark's absence, by far, was Manning, president of the Higher Learning Commission of the North Central Association of Colleges and Schools, which currently accredits both Ashford and the University of the Rockies, Bridgepoint's other postsecondary institution.

Manning took over at the accrediting agency in 2008, and she was hired, in part, because of her concerns about how the Higher Learning Commission had become the accreditor of choice for many of the largest for-profit colleges, which because of their national footprints are able to choose to be accredited in any region where they have a large presence.

The fact that Manning is an acknowledged skeptic about for-profit colleges did not earn her any slack from Harkin, though. While he accepted her explanation that the initial approval of Ashford's changeover from a 300-student Roman Catholic campus to a online behemoth occurred long before she arrived, he questioned why a Higher Learning Commission team that visited Ashford in 2009 was dominated by for-profit-college officials and ignored evidence that large numbers of students were dropping out in the first year.

When other Democrats arrived, they joined the fray, occasionally in ways that, whatever else they showed, revealed how little they understand accreditation. Senator Kay Hagan, of North Carolina, said that she was "absolutely flabbergasted" by Clark's 2010 pay of more than $20 million and surprised when Manning told her that presidential pay is not a factor that accreditors typically look at, given their focus on institutional quality rather than financial integrity, which is the domain of the federal government.

"That is something you should be looking at," Hagan told Manning. "When federal dollars are involved, there needs to be oversight on how all of this money is spent." Hagan also tossed off a throwaway line -- "the schools that you accredit actually pay you for your accreditation?" she asked Manning -- on which Harkin seized. "That doesn't sound right," the Iowa senator said, implying an inherent conflict of interest.

Oregon Senator Jeff Merkley asked Manning why the sort of "massive increase" that has occurred in Ashford's enrollment would not "trigger some kind of serious examination" by the North Central accreditor.

"Unfortunately, it wouldn't have a couple years ago," but it would now, Manning said, citing a series of new policies that the Higher Learning Commission has, or soon will, put in place, which will flag institutions that change programs significantly or increase the size of distance programs. She also noted on multiple occasions that in the past year, the accreditor has twice rejected efforts to transform struggling nonprofit colleges (Rochester College in Michigan and Dana College in Nebraska) into for-profit institutions -- suggesting "our new, strengthened policy on acquisition."

"What was wrong in our process," she said, in one of several instances in which she acknowledged the accreditor's past flaws and failures, "is that once we accredited [Franciscan's transition to Ashford]... it grew this enormous superstructure of online education.... We had not seen that before, so we didn't have the tools to predict that or control that."

She added: "We got behind the curve when two things came together: the entry of large private equity firms into higher education, and the emergence of distance education as a modality that would really work.... We did not have the policy framework to deal with it adequately."

"What happened in 2005 could not happen today," Manning said.

Harkin and Senator Richard Blumenthal of Connecticut both said that the Bridgepoint/Ashford story showed that the existing system of oversight of for-profit colleges -- involving the federal government, the states, and accreditors -- may not be working. "I'm sensing a strong sense of disquiet if not dissatisfaction, or maybe even a stronger emotion, of skepticism, about whether the oversight and scrutiny here has been sufficient to eliminate the bad actors and bad apples in this industry," said Blumenthal.

When Harkin suggested that it may be time to create "some new kind of regulatory framework" to deal with large corporate higher education providers (as some other commentators have suggested in recent discussions of accreditation reform), Manning suggested that it may make sense to have someone else look at business practices -- but that "insofar as [assessing the quality of a for-profit college] as a school, and the actual learning that takes place, I urge you to leave that to us."

"Well, I have my questions about that," Harkin responded. "To the extent that accreditors provide for accessibility [for colleges] to student loans, we have an interest in accrediting agencies, how they're structured, and how they regulate. If you're going to be accrediting agencies, you need to do these things."

 

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