How Corporate Schools Rip Off Taxpayers, Families and Students

In my book, Corporations Are Not People,  I talk about Bridgepoint Education, among other corporate school rip-offs of students and taxpayers. Taxpayers effectively transfer billions of dollars of student loans and government guarantees to corporate executives and Wall Street investors, and get very little in return.

A United States Senate investigation has reported that “over 87 percent of total revenues [to corporate schools] came directly from the federal government, but 57 percent of the students who enrolled between 2008-2009 have departed without a diploma but with a high probability of debt.” The sixteen largest for-profit schools had profits of $2.7 billion in 2009, with some corporations doubling profits between 2009 and 2010 alone.  In 2011, when the Department of Education proposed to apply minimal performance standards (based on actual student graduation rates) to corporations that take billions of taxpayer dollars, the corporations threatened a lawsuit claiming a Constitutional right to prevent that public accountability.

The Bridgepoint story is pretty illustrative. In the 2009-2010 year, Bridgepoint’s Ashford University received $613 million in federal student aid funds. “Ashford University” used to be Franciscan College, a non-profit school operated by the Sisters of St. Francis. They used to spend $5,000 per student on education. Then Bridgepoint, backed by a private equity firm, bought out the school, changed the name, raised the tuition to as high as $46,000, and lowered spending per student on education to about $700.

From 300 students at Franciscan University in 2005, enrollment (including on-line students) at the newly corporatized Ashford University went to nearly 78,000 by 2010. Most of these new recruits quickly drop out, but not before Bridgepoint collects a lot of money. 84% of students enrolled in an associate degree program at Ashford University are gone by the next year (63% of students in the bachelors degree program do not return the next year). Bridgepoint employs more than 1,700 people to recruit new students; it employs one person to help students with job placement.

Bad performance, right? Maybe if you’re measuring performance by how well the education’s going. But that’s not how corporate, for-profit schools measure performance.  Bridgepoint paid its CEO, Andrew Clark, $20.5 million in 2009, and a total of $36 million to its top five executives. The Sisters of St. Francis must be horrified.

Now Republic Report, a daily  eye-opener about corporate power, Congress and corruption brought to us by United Republic, is exposing how campaign contributions and corporate corruption of politicians drives this process. Check out Online Education Companies Donate to Congressman; He Introduces Bill Subsidizing Them. And then let’s do something.

About Jeff Clements

Jeff Clements, an attorney and author, is the president and co-founder of Free Speech for People, a national, non-partisan campaign to challenge the creation of Constitutional rights for corporations, overturn Citizens United v. FEC, and strengthen American democracy and republican self-government. He is the author of the Corporations Are Not People (Berrett-Koehler, 2012). Mr. Clements, an attorney, has represented and advocated for people, businesses and the public interest since 1988. Mr. Clements served as Assistant Attorney General and Chief of the Public Protection & Advocacy Bureau in the Massachusetts Attorney General’s Office from early 2007 to 2009. As Bureau Chief, he led more than 100 attorneys and staff in law enforcement and litigation in the areas of civil rights, environmental protection, healthcare, insurance and financial services, antitrust and consumer protection. Mr. Clements also served as an Assistant Attorney General in Massachusetts from 1996 to 2000, where he worked on litigation against the tobacco industry and handled a wide range of other investigations and litigation to enforce unfair trade practice, consumer protection and antitrust laws. In private practice, Mr. Clements has been a partner in the Boston law firms of Clements & Clements, LLP and Mintz Levin. He also has practiced in Maine, where he has represented clients in a variety of appeals and litigation, and in investigations and prosecutions by the U.S. Attorney’s Office and Maine Attorney General’s Office. In the 1990s, Mr. Clements was elected as a Trustee and President of the Board of Trustees of the Portland Water District, a public agency responsible for protecting and delivering safe drinking water and ensuring proper treatment of wastewater for 160,000 people in Portland and South Portland, Maine and several surrounding communities. He was a co-founder, officer, and director of Friends of Casco Bay, an environmental advocacy organization focused on protection and stewardship of Maine’s Casco Bay. He also has served as a Trustee and President of the Board of The Waldorf School in Lexington, Massachusetts. Mr. Clements graduated with distinction in History and Government from Colby College in 1984, and magna cum laude with a concentration in Public Law from the Cornell Law School in 1988. He lives in Concord, Massachusetts with his wife and three children.
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One Response to How Corporate Schools Rip Off Taxpayers, Families and Students

  1. fatherkane says:

    Reblogged this on The Last Of The Millenniums and commented:
    From this article – ‘Bridgepoint employs more than 1,700 people to recruit new students; it employs one person to help students with job placement’.
    This is the road we are headed on.
    Creating wealth not jobs. Protecting profits not people.
    Great article and a great site.

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