From the San Diego Union Tribune, the hometown paper Bridgepoint Edcucation (Ticker: BPI), the parent company of Ashford University comes the following story from Saturday, September 5:
San Diego-based Bridgepoint Education, the for-profit operator of online college programs and two universities, was among Wall Street’s top losers yesterday after it announced that it might face fines and penalties for possibly misusing federal student aid.
he U.S. Department of Education’s inspector general opened an audit last year of Bridgepoint’s Ashford University, a former Catholic teachers college in Iowa with an enrollment of about 3,800. The company acknowledged that it could face fines and “corrective action” for its handling of federal student loans and grants. A draft audit report is expected within 30 days, and Bridgepoint will have a chance to respond.
The inspector general’s findings could cover Bridgepoint’s compensation of enrollment officers, returns and disbursement of student aid funds and documentation of students’ leaves of absence, the company said. Ashford University got 87 percent of its revenue from federal financial aid in 2008, according to a company filing.
According to Bridgepoint’s most recent quarterly report, it has faced several issues in recent months in operating its college programs.
When its administration of federal student aid at Ashford fell below federal guidelines, Bridgepoint had to post a $12.1 million letter of credit to guarantee that it would pay the penalties if the standards were not improved. The University of the Rockies had similar issues, requiring a separate, $700,000 letter of credit.
At the end of 2007, Ashford blamed “human error” for missing deadlines to return student loans on time to the U.S. Treasury, but an additional letter of credit was not required.
“Although the company has taken steps to reduce late refunds, it cannot ensure that such steps will be sufficient to address this issue,” Bridgepoint’s second-quarter report said.
In addition, the company settled a shareholder dispute for $11.1 million in March. The issues related to stock options and financing in 2005.
This story was also carried on the Associated Press, Bloomberg and Reuters wires. The story was notable because for Friday, Bridgepoint was in the top ten percentage point losers in that day’s trading, which usually will trigger a blurb of some sort in the financial press even for smaller companies. The stock has recovered slightly as of this writing is trading at $16.20/share.
Interesting how the local print press has missed both notable stories regarding on of the regions’s largest employers/taxpayers this year, that of the BIP initial stock offering and this latest. All of which can be found with a simple Google news alert. I haven’t even looked to see what ADM and Lyondell/Basel are up to.
