Buying Legitimacy: How A Group Of California Executives Built An Online College Empire

CLINTON, Iowa -- Inside the red brick campus of Ashford University, perched on a bluff above the Mississippi River, the door marked "President's Office" remains perpetually shut. Telephone calls to the university's head are swiftly transferred to a corporate office some 2,000 miles away, in San Diego.

A new, 500-seat football stadium adorns the campus, and is featured prominently in Ashford's promotional literature, though the university has no football team. Signs around campus proudly read "Founded 1918" and "90 Years Strong," despite the fact that Ashford -- one of the nation's fastest-growing for-profit colleges -- has existed for less than a decade.

The perplexing campus landscape here in Iowa amounts to an elaborate stage set for a lucrative, online education empire that uses these trappings to sell itself to students as a traditional college experience. That strategy was the brainchild of the corporation behind Ashford: Bridgepoint Education Inc., a publicly traded venture started by a group of former executives from the University of Phoenix, a name now synonymous with for-profit higher education and the controversial marketing practices that have brought the industry crosswise with federal regulators.

Six years ago, Bridgepoint purchased what was then called Franciscan University of the Prairies, a near-bankrupt, 300-student college that for decades had been run by a local order of Franciscan nuns. The school delivered a crucial commodity: legal accreditation. That enabled Ashford's students to tap federal financial aid dollars, the source of nearly 85 percent of the university's revenues -- more than $600 million in the last academic year. Ashford now counts nearly 76,000 students, 99 percent of whom take classes online.

Two years ago, Bridgepoint engineered an initial public stock offering that brought in $142 million.

WATCH a tour of Ashford's campus:

The story of how a California corporation managed to use a small campus in Iowa as the springboard for a national, online education venture underscores a key element that has enabled explosive growth in the for-profit college industry: Schools with dubious educational records have secured the imprimatur of legitimacy simply by owning an accredited institution.

Many accreditors do major reviews of colleges just once every 10 years. The next comprehensive evaluation for Ashford is not scheduled until 2014.

"It's an area where the old rules don't fit," said David Longanecker, a former assistant secretary of education in the Clinton administration who now serves as president of the Western Interstate Commission for Higher Education, a consortium of colleges founded by Western states in the 1950s. "Accreditation hasn't quite caught up with the contemporary world."

Just as Wall Street managed to use simple things like home mortgages as raw material for complex and profitable investments, Bridgepoint has pulled off its own bit of alchemy here in Iowa: It has leveraged the purchase of of a failing but accredited campus into a badge of authenticity for its entire sprawling operation -- even as students have fared poorly, dropping out in large numbers and increasingly unable to pay back their federal debts.

POTEMKIN UNIVERSITY

The cachet of the traditional ground campus in Iowa, with its sports teams and historic buildings, has been a key marketing tool for Ashford, a feature that distinguishes it from other online rivals such as the University of Phoenix or Kaplan University, according to former and current employees.

The school's website boasts idyllic autumn scenes and photos of smiling students walking the Iowa campus. Just a few months back, Bridgepoint Education sponsored a major college football contest, the Holiday Bowl. Slick commercials for Ashford University were beamed out to a national television audience.

But for the thousands of new recruits who enroll online at Ashford each year, the friendly image of the Iowa campus ends soon after their applications are complete.

Behind the university's rapid growth is a pressure-cooker recruiting environment that treats prospective students like figures on a balance sheet, not people seeking opportunity through education, according to more than a half-dozen current and former employees ranging from management to entry-level recruiters interviewed by The Huffington Post in the past month.

All cited the central importance of a rigid performance matrix handed down by management -- one that rewards and punishes employees almost entirely on the basis of whether they are able to meet six-month recruitment targets.

WATCH Clinton, Iowa residents discuss Ashford's role in the community:

The goal, employees say, is getting "starts": students who fill out the paperwork for student loans and make it through at least four weeks of their first five-week course. That is the point at which the university is able to keep the student's federal aid money, regardless of whether they continue their studies. After that, according to the Ashford employees, any form of counseling drastically drops off.

"There were numerous times when I enrolled students and thought, 'All I've got to do is babysit them for four weeks,'" said a former leader in the admissions department, who spoke on the condition that he not be identified because he is still employed at another for-profit university. "I'd be thinking, 'Come on, this person is clearly not ready to go to school.' But I'd call you, pump you up, keep you confident for four weeks, and once I knew you completed, you were forgotten. It's easy when I'm counting the money."