DeVos Hires Top Official at For-Profit University to Help "Right-Size" Department of Education

Jennifer Berkshire reports that Secretary Betsy DeVos has turned to a top official from the scandal-plagued for-profit higher education industry to "right-size" the Department of Education.

As the New York Times said when his appointment was announced:

"As chief compliance officer for a corporate owner of for-profit colleges, Robert S. Eitel spent the past 18 months as a top lawyer for a company facing multiple government investigations, including one that ended with a settlement of more than $30 million over deceptive student lending."

Eitel worked for Bridgepoint Education Inc., which took over a small private college in 2005, called Ashford College. Bridgepoint turned it into a colossus of online higher education. In 2005, Ashford had 300 students. By 2010, it had more than 80,000.

Berkshire interviewed Christopher Crowley of Wayne State, who explained how the business leaders of the new enterprises turned a struggling small college into a profitable success.

Crowley:

When Bridgepoint bought Franciscan in 2005, the college was going bankrupt. The total result amount of student loan money that Franciscan was taking in at that point was $3 million. But less than two years later, the school, which was now called Ashford University, was getting $81 million in federal student aid and reporting profits of $3.1 million. By 2010, Ashford University reported $216 million in profit and was receiving $613 million in federal student aid funds. Part of the reason for this was a huge drop in how much less they were spending per student. Franciscan spent about $5,000 per year, per student on instructional costs. Ashford spent just $700. That's an 86% reduction in spending over five years. That money went to pay for lavish executive compensation as well for marketing and recruitment. By 2010, Bridgepoint was spending $211.6 million on advertising, more than any other publicly traded education company in the United States at the time.

Ashford's transformation into a piggy bank for investors is a story of the triumph of opportunistic capitalism fueled by greed. But it is also a story that recounts the collapse of the higher learning. And one of the architects of that transformation will guide Betsy DeVos, who has no managerial experience, as she reorganizes the U.S. Department of Education.