For-profit colleges face mounting scrutiny

The Bridgepoint plan includes “hiring additional internal administrative and experienced management personnel to assist students who have left the institution and are in repayment, as well as contracting with an external default management firm to implement a comprehensive student-default management plan.”

“By the time the three-year rates apply in 2012, we expect that the investments we have made and the organizational changes we have instituted will allow us to maintain” default rates under 30 percent, and therefore within federal funding guidelines, according to the company’s statement.

Bridgepoint’s Ashford University experienced a three-year rate jump from 6.1 percent to 17.4 percent.

For-profit school officials said the industry is unfairly criticized while public colleges avoid media scrutiny and condemnation from local and national lawmakers.

Arthur Keiser, chancellor of Keiser University, a family-owned chain of 13 campuses across Florida, said many four-year schools pay recruiters when they enroll international students—a practice not often brought to public attention.

“It’s a worry that the press is taking one lawsuit and making it a big issue,” said Keiser, the university’s chancellor for 30 years. “There isn’t a university in this country that doesn’t have multiple lawsuits going at the same time. It’s pretty easy to sue anybody.”

He added: “Incentive-based compensation has been used everywhere. And people just don’t understand the circumstances.”

The rash of negative publicity hasn’t damaged commercial colleges financially. Millions of Americans have returned to school during the economic downturn that began in fall 2008, and many of them have turned to for-profit campuses.

The majority of the nation’s largest for-profits saw a 20-percent enrollment increase in 2009, according to industry analyses. DeVry University, which has 65,000 students on 90 campuses across North America, saw a revenue increase of more than 30 percent this year.

The Illinois-based company said Dec. 8 that undergraduate enrollments rose 22.7 percent to 64,003, up from a 16.9-percent jump in 2008.

According to new data from research and consulting firm Eduventures Inc., for-profit colleges’ share of the online-learning market rose from 39 percent in 2008 to 42 percent in 2009, as the poor economy drove people—many of whom have families or other responsibilities—back to school.

Apollo Group’s stock shares rose by about 10 percent in the hours after the company’s legal settlement was announced. That increase came on the heels of a 45-percent third quarter jump in profits.

For-profit institutions, Keiser said, are too often “bunched into one big group” with career training schools whose students have some of the highest default rates in the country, distorting the image of reputable commercial campuses that abide by federal rules.

“We’re dumped into the same group with a cosmetology and truck driving school in inner-city L.A.,” he said. “With the economy getting bad, we don’t think we’re going to have a loan default problem? … That’s just not realistic.”


Federal Student Aid Data Center

University of Phoenix

Denny Carter

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