Accreditation scrutiny weighs on Bridgepoint shares
(Reuters) - Bridgepoint Education Inc's (BPI.N) accreditation body piled more pressure on the for-profit education provider, stoking investor concern that its Ashford University could lose accreditation.
The company's shares fell 26 percent to their life-low of $9.33 on Friday. The stock has plunged 40 percent in the last four days, shaving more than $600 million off its market value, since Bridgepoint first disclosed its troubles with accreditors.
Higher Learning Commission (HLC), to which Ashford University is accredited, has asked Bridgepoint to submit a report proving that the university is in compliance with its guidelines, after the institution was denied accreditation by another agency.
The university has been put on 'special monitoring' status, which means that the HLC can evaluate accreditation without the usual review procedures. The HLC was not expected to review its accreditation before 2014-15.
Bridgepoint has been trying to switch the university's accreditation to the Western Association of Schools and Colleges (WASC) from the HLC, but the WASC refused accreditation earlier this week.
The WASC had said Ashford University spends more money on recruiting students than on teaching them.
"Given the WASC denial, we are not completely surprised by the HLC's heightened scrutiny, though we expect this may put further pressure on the stock," BMO Capital analyst Jeff Silber said.
Loss of accreditation to Ashford University can deny the university access to federal student aid, which makes up for most of the parent company's revenue.
The HLC has asked Ashford University to prove that it has an effective way to monitor student learning and outcomes. It has also been asked to establish its autonomy from Bridgepoint, and prove that it spends sufficient money on student retention and education.
"The question is whether BPI has grown too quickly to be able to adequately monitor and assess the learning that is taking place," Citigroup analyst James Samford said.
Regional accreditation by the HLC had helped Bridgepoint grow its enrollment at a fast pace.
The WASC had pointed out that enrollment at Ashford University had grown from 10,000 students in 2007 to nearly 100,000 students in 2012.
Ashford University is required to a host an advisory visit by the HLC by October 9, Bridgepoint said in a statement on Friday. HLC will review the report of the visit team in February.
The commission had recently asked the company to demonstrate "substantial presence" in the 19-state north central region by December 1 this year.
(Reporting by Megha Mandavia in Bangalore; Editing by Sreejiraj Eluvangal, Saumyadeb Chakrabarty)
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