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October 31, 2012

Regulators, accreditors go after online colleges

(Continued)

The Minnesota rule was short-lived, but there will be other challenges. The federal government fought for two years to make all online providers get authorization in every state where they have students, a prohibitively expensive process for smaller operators. Fortunately, the courts have forced the Education Department to back off.

Unfortunately, there may be less recourse when it comes to accrediting organizations that have done their bit to restrict competition in higher education. Ashford University, an online for-profit institution with about 75,000 students, is an easy target. Although it is fully accredited in the Midwest by the Higher Learning Commission, it was denied accreditation for the same educational offerings by the Western Association of Schools and Colleges, which is located nearer the San Diego headquarters of the university's parent company, Bridgepoint Education Inc. One objection involves the compensation of the institution's employees, the subject of a Justice Department investigation.

I am not taking these concerns lightly, yet consider that the Bridgepoint Education, as a publicly traded company, operates under multiple levels of scrutiny. Traditional not-for-profit private universities, meanwhile, are largely unmonitored, and the issue of its employees' compensation seldom arises.

Bridgepoint's stock has plunged to less than $10, well below the $30 it traded for at one point last year. This means about $1 billion in market value has been lost. Tens of thousands of students are no doubt concerned.

How can a program be acceptable in one region but be held deficient in others? Is this more an indictment of Bridgepoint or of the crazy-quilt nature of American accreditation? Critics of Ashford point to a high dropout rate — about 80 percent — but many traditional brick-and-mortar universities have four- year graduation rates that are less than 15 percent. What standards are the accrediting agencies using?

The discrepancies point to a conflict. Political leaders and wealthy foundations (the Gates and Lumina foundations, in particular) say we need to increase the number of college students to promote equal educational and economic opportunity, while reining in the rapid inflation in college costs. But other powerful forces will work to control competition in higher education and are raising barriers to offering college at an affordable price, whether it is a for- profit such as Ashford or a venture such as Udacity, which plans to get its revenue from employers who use it to identify potential job applicants.

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