Senate committee to focus on Bridgepoint schools

Thu Mar 3, 2011 11:56am EST

* Hearing set for March 10

* Harkin says Bridgepoint growing, but students drop out

WASHINGTON, March 3 (Reuters) - A Senate committee that has been critical of the for-profit education sector will hold a hearing next week to discuss Bridgepoint Education (BPI.N), the committee said on Thursday.

The Senate Health, Education, Labor and Pensions Committee will use Bridgepoint as an example of schools which have grown quickly even as their students drop out, said Senator Tom Harkin, the Democratic chairman of the committee.

"Using Bridgepoint as a case study will help us better understand how the practices of for-profit colleges impact their student's chances for success," Harkin said in announcing the hearing.

Harkin said that Bridgepoint had seen its profits increase sharply despite high drop-out rates.

It is also under investigation by the Iowa attorney general's office.

Bridgepoint's Ashford University, which is in Harkin's home state of Iowa, has a six-year graduation rate of 43.8 percent, according to the education think-tank Education Trust.

A total of 21.7 percent of Ashford's former students default on their loans within three years, according to Education Department data

Its other school is the University of the Rockies in Colorado, which has a very low default rate and few federal loan borrowers.

The hearing has been set for Thursday, March 10 at 10 a.m.

On March 1, Bridgepoint Education posted better-than-expected quarterly results helped by strong student enrollment growth and said it expected enrollment to continue to rise in 2011. New student enrollments for the fourth quarter jumped 47 percent to 15,600.

Bridgepoint CEO Andrew Clark has been listed as invited to speak at the hearing, and an official from Bridgepoint said he was reviewing the request.

Harkin, who has called for tougher regulation of the sector, has criticized many schools in the for-profit education sector for being pricier than their competitors.

Former students of for-profit schools default on student loans at a rate of 25 percent, according to the Education Department.

Under proposed Education Department regulations, schools' students would be ineligible for aid if fewer than 35 percent of former students are paying back loans despite being capable of doing so after three years. The rule -- which could become final this month -- is slated to take effect in mid-2012.

For-profit schools have filed a lawsuit to stop the rule. Losing federal aid could cripple some for-profit schools, some of which have already cut jobs during the regulatory crackdown.

The Everest brand of schools, owned by Corinthian Colleges (COCO.O), had just over 20 schools whose students defaulted at a rate of 30 percent or higher, Education Department data showed.

Washington Post's WPO.N education unit, Kaplan Higher Education, had more than 10 schools with default rates above 30 percent and another eight with default rates above 20 percent. (Reporting by Diane Bartz, editing by Dave Zimmerman)

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