Barbarians in the Ivory Tower

America's for-profit colleges offer education only a con man (or a congressman) could love.

Bridgepoint, which also owns the University of the Rockies, grew from just 12,623 students in 2007 to 77,892 in 2010. Its profits also exploded, going from just $4 million to more than $216 million annually. About 85 percent of its revenue comes directly from the federal treasury.

But if Bridgeport and Warburg Pincus are billing top dollar, they're unrepentant misers when it comes to educating kids. In 2009, Bridgepoint spent less than $700 per student on actual instruction. By comparison, the nearby University of Iowa spends 17 times that figure.

What Bridgeport doesn't short is its marketing, spending $2,714 per student to keep the turnstiles spinning. Overall, the 15 largest for-profit colleges spend nearly $13 billion a year on recruiting and marketing.

"It's basically consumer fraud rendered to a business model," Barmak Nassirian says.
Courtesy of Barmak Nassirian
"It's basically consumer fraud rendered to a business model," Barmak Nassirian says.
Suzannne Lawrence, who worked as a recruiter at Argosy University, says the pressure to recruit students prompted all sorts of illicit shenanigans.
Courtesy of Suzanne Lawrence
Suzannne Lawrence, who worked as a recruiter at Argosy University, says the pressure to recruit students prompted all sorts of illicit shenanigans.

Needless to say, it's a terrific business if you don't have to worry about educating kids. Nearly 80 percent won't complete their program within six years — almost double the failure rate at traditional schools.

The tactics have become so brazen that even accreditors are taking notice. Last month, Ashford conceded that the Western Association of Schools & Colleges had denied its accreditation renewal, noting that the school had just 50 full-time faculty members to teach 90,000 online students. Within a week, Bridgepoint's stock price had plunged 50 percent.

"It's basically consumer fraud rendered to a business model," Nassirian says. "Over-advertise, oversell, overcharge and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."

We've Got Your Money. Now Beat It.

Mary had been a good student all her life, earning a master's in psychology from William & Mary University in Virginia. When the military transferred her husband to Tampa, she chose Argosy University, the only area school offering a psychology doctorate geared toward clinicians rather than researchers.

Mary, who doesn't want her real named disclosed, figured it was legit. Argosy was accredited by the American Psychological Association.

She aced her studies with a 3.7 GPA. All she needed was an internship to graduate. That's where her problems began.

Argosy University, with 19 campuses, is owned by Education Management Corporation (EDMC), whose investors include Goldman Sachs and Providence Equity Partners, a Rhode Island private equity firm. To wring out more profit, Argosy began taking on more students than it could handle, says Mary's lawyer, Florida state Representative Rick Kriseman.

But Argosy didn't have the professional connections to supply enough internships. So, like air traffic controllers, it decided to place students into holding patterns.

Mary was asked to accept a practicum instead, a lesser form of internship that wouldn't bring her any closer to her doctorate. She was upset but went along, spending the next eight months volunteering at a mental health facility. But by the time she was finished, Argosy still didn't have enough internships. Her instructors ordered her to take a second practicum.

She didn't have much choice. Mary had already invested four years and more than $100,000. She spent another five months volunteering. By then, her instructors had begun to question her intellectual rigor.

They not only flunked her out of the program but refused to let her defend her work before a board of teachers and peers, then denied her a chance to address administrators before they rejected her appeal. (EDMC refused repeated requests for comment.)

Mary was shocked. "I was an A student," she says. "It was baffling to me how this could happen at the last minute. You have to understand the shame of going to school and being an A student and becoming a flunked-out person. It's so foreign and confusing."

Yet Kriseman would discover a pattern at play, finding three more students who'd suffered a fate similar to Mary's. "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord," he says.

Argosy's problems seemed to be nationwide. Across the country, in the psychology program at Argosy-Seattle, the school had assured its doctoral candidates that accreditation was moments away — since without certification, their degrees would be all but worthless. It wouldn't be until later that administrators confessed that their application had failed — and they were closing the entire program.

Failure at a Luxury Price

For-profit colleges like to place their alarming failure rates in charitable terms. They claim to disproportionately serve low-income students who struggle in school.

But if they're serving people of lesser means, why are they charging so much money?

On average, a four-year degree from a for-profit runs twice what in-state tuition costs at a public school. When it comes to two-year programs, the disparity widens: For-profits charge three to four times the rates of their public counterparts. Yet they've still managed to lull the political class into believing their competition is driving down tuition.

During the Republican primary, Mitt Romney praised a major donor and co-chairman of his Florida fundraising team — Bill Heavener, owner of Full Sail University — for helping to "hold down the cost of education." What Romney failed to mention is that a 21-month degree in video game art at Full Sail costs more than $80,000. And that's not unusual.

A four-year bachelor's degree in business from Indiana-based ITT Tech costs almost $89,000. That's more than twice the in-state tuition at more venerated Indiana University.

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My Voice Nation Help

Education is an extremely important part of life. If schools are built for profit, the whole purpose of a school is a sham. They shouldn`t be considered legal if they are for profit. Shocking how they walk away after doing this kind of fraud. Forcing students to pay up through payday loans or other various types of loans. While the government spends hundreds of billions on the military to fight someone else`s war.


Guess writing about how sketchy these for-profit universities are is good enough. Because the full page ad for Argosy University on pg. 12 of this weeks Observer just doesn't send the same message. I get that the Observer needs funding, but you couldn't even make it two weeks? Village Voice ftw...


For-profit "schools" shouldn't even be legal, let alone able to get away with this level of fraud.  Sad thing is, though, a lot of this doesn't sound that much different from my experience at UTD's Jindall School of Management.


I was enrolled in a for profit school program for graphic design in the early 1990's. I decide after 4 months that it was not for me and was not on the up and up. Meaning there were computer graphics coming on the scene and this school (college) had no computers available and was not looking into getting any either.

I was told by the financial aid office that I was responsible for the loan that I had taken out and would need to pay that back to the government or to Sallie Mae.

I said forget about that and started researching the school and the members of the "Oklahoma State Board for Private Schools that served as the "watchdog" over these private school and any improprieties. 

I found out that the people that owned the private colleges were no only on the Oklahoma State Board but the man that owned the school I was attending was the President of the Board!

So I decided to attend their meeting and state my case in front of the entire board!

Needless to say my loan was "forgiven" and I never heard from them or Sallie Mae again!

Perhaps if more students did something simular these school would close up and go away permanently... 

ThePosterFormerlyKnownasPaul topcommenter

Be careful what you ask for, you just might get it.


Why should neither the for-profit schools nor Congress be worried about the money?  After all, it was someone elses money.


...get your degreeeeeeee..... set yourself freeeeeeeee........




*smiles, humming*


VVoice is just carrying water for lefty academics who don't like competition.  The larger problem is not-for-profit colleges, many of which have the same danged problem, but are too poorly run to have any money over at the end of the day.  The higher ed bubble will burst pretty soon and the cocooned & mostly un-hireable academics will be slapped in the face by reality.  The various for-profit schools will be part of the solution after the bubble bursts.


sounds like a real redistribution of wealth underway.(taking from the poor and middle class to give to the rich)


I'm not sure Bobby can be held to the contract since he was a minor when he signed it.  Perhaps Bobby should speak with an attorney.


South Harmon Institute of Technology

Sotiredofitall topcommenter

"Higher Education" has become a scam on many levels, not just at the for-profit outfits.  The UT Austin football program had operating profit with $70.1 million in fiscal 2010 and I still get phone callas asking for donations to support school academic programs.


 @roo_ster You obviously didn't read the article but are just spouting typical, tired partisan rhetoric. 


 @Sotiredofitall  Add to that the practice of high school administrators  to push ill prepared students into ANY type of higher education in order to improve the school's stats and you have a real problem.  There was a counselor at a school I taught at that comvinced an economically disadvantaged special ed student that she could go to community college on student aid.  She could only take "developmental" classes and after two years had no college credits and a debt she will struggle a lifetime to repay.