Buying influence with the media.
Bridgepoint Education recently discloseda deal under which it will pay Forbes Media, publisher of Forbes magazine, at least $45 million over 12 years, to name Bridgepoint's Ashford University business school the Forbes School of Business and license Forbes content for Ashford programs. After Steve Forbes comes to Bridgepointto sign this deal, will the journalists on his staff offer unbiased coverage of Bridgepoint, such as the fact that Bridgepoint spent in a recent year more than $2,000 per student on marketing and only $700 per student on instruction? Or that Senator Tom Harkin's 2012 investigationfound so many problems at Bridgepoint that he called the institution " a scam"?
The nation's biggest for-profit college, University of Phoenix, which itself spends only $892 per student on instruction but $2,225 on marketing, is the sponsorof NBC's annual Education Nation conference; an executive just told me she was disinvited from speaking at the NBC event this year after she was publicly critical of the University of Phoenix. The venerable Chronicle of Higher Education admittedlast year that it was paid by Career Education Corporation (CEC), the fourth biggest for-profit college, to let CEC pick the speakers for a Chronicle event on reducing student loan defaults. CEC hosting such an event was a travesty: Its schools' own loan default rate -- 21.6 percent of its students defaulted within three years of leaving the school -- is almost double the average rate for all U.S. colleges. Also, the company recently agreedto pay $10.25 million to settle charges by New York's Attorney General that it significantly inflated its job placement rates, including by counting students as placed in a job because they worked at a one-day job fair.
Paying CEOs big money . Corinthian Colleges paid its CEO Jack Massimino $3.4 million in 2011. According to a lawsuitfiled by California's attorney general in October, Corinthian has systematically lied to students and regulators, especially about its job placement rates for students. EDMC, the second biggest for-profit college company, saw its stock plunge from $43 in 2006 to $2.84 in 2012, and student enrollments dropped significantly. EDMC responded by laying off hundreds of teachers, but increased the salary of its chairman, Todd Nelson, from $1.8 million in 2009 to $13 million in 2011. Meanwhile, the U.S. Justice Department and half a dozen states have sued EDMC for fraud, alleging the company paid its recruiters based on the number of students signed up, in violation of federal rules. KaplanEducation, which is under investigation by at least four state attorneys general, paid its CEO, Jonathan Grayer, $76 million when he resigned in November 2008. University of Phoenix co-founder John Murphy made enough money to buy this unbelievably lavish$27 million San Francisco mansion.