On Wednesday the 20th, I attended the Chamber of Commerce, Biz After 5, at Ashford University’s call center out on the bypass. The food and drink spread was very nice. Before anything else, let me just say that the facility is great, Ashford made a great decision (albeit with some considerable arm-twisting) to locate it in Clinton and the University is an assett to the community and thus far have been outstanding coroporate and public citizens in Clinton.
But, there had to be a but.
Ashford’s parent company, Bridgepoint Education, Inc, had its initial public offering on the New York Stock Exchange on April 15. (Ticker: BPI) . This is an important development for the community but there was no coverage of this by the local press.
Several years ago I mused on whether for-profit, online universities were a sustainable business. The crux of my argument was that there is probably an optimal enrollment size where student achievement, satisfaction and retention are in a good equilibrium with profits. Trying to scale to large will lead to a drop in quality of education product, lessening student satisfaction and retention and thus leading to a nasty churn rate and problems with student loans. A conservative business plan would be to strive for an enrollment level close to that profit-performance equilibrium and then use process improvement to wring efficiency and higher profits as well as modest enrollment growth. This would allow the company to pay consistent stock dividends over long periods and encourage shareholders to hold onto BPI stock long-term.
The fact that Bridgepoint made no secret of its plans to take the company public just deepened my worries. We still live with an investment model that values constant growth in stock value over consistent profits and dividends The pressures on Bridgepint management for quarterly and annual performance stock price gains will drive the company to scale up and up.
Similar pressures led the University of Phoenix — from which many of BPI’s founding members begain their careers in for-profit education — to pay a $9.8 milion fine for fraudulent recruiting practices to the US Department of Education in 2004.
This was all in the back of my mind then when I and other members of the business community took the guided tour of the call center two Wednesdays ago. The tour was conducted by two of the human resources and public relations staff at Ashford. Among the questions asked by another tour member one was rather pointed and to the point: What is your student retention and graduation rate?
I have to paraphrase the reply because I was not taking notes but I remember it well for its shocking lack of knowledge, candor or both. “We are currently calculating those figures, so I don’t have them for you. But they are good.”
My personal opinion is that unless the person conducting the guide was tremendously uninformed about her company that the answer had to be a bald-faced lie. There is just no way not to have those figures, even if they are not the most current, in one’s mind. They are the meat-and-potatoes, the be-all and end-all of the business. It simply wasn’t credible that she simply wouldn’t know. Later I discussed this with a couple of members of the tour group and they expressed a similar opinion.
The obvious conclusion — other than the speaker didn’t know what she was talking about, an option I’m certainly not completely discounting either — is that the company doesn’t want the locals to know.
None if this should be construed to think that I think there is a grand conspiracy going on. Only this. The citizens of Clinton should keep it firmly in their minds that Ashford University is no longer our beloved old Mount St. Claire/Franciscan College. It is run by a publicly traded company headquartered half a continent away in San Diego, CA. It will do whatever it thinks necessary to maximize shareholder value. That is its one and only reason for being. To the extent that Ashford University is a good corporate citizen in this area is a function of the company’s financial success and growth strategy. No more, no less.
