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In the early 2000s, the business of for-profit college was booming. After the University of Phoenix's parent company, the Apollo Group, went public in 1994, others were close on its heels: Corinthian, ITT Tech, and Kaplan each had IPOs in the 1990s, netting tens of millions of dollars and setting off tremendous periods of growth.Soon, private equity firms caught wind of the opportunity. In 2003, there were just 18 for-profits owned by private equity firms; less than a decade later, that number had more than tripled, to 61. For-profit enrollments were also exploding, from a little more than 425,000 in 2000 to 1.7 million in 2012 — an increase of more than 300%. By contrast, public colleges had grown by just 31%.Increasingly the boom could be characterized as a Wall Street versus Main Street match-up. Even in the 1980s, the majority of for-profit programs were still mom-and-pop affairs: short-term certificate courses in subjects like cosmetology and truck driving. By the early years of the new millennium, students were attending Fortune 500 chain schools for full-fledged degrees in teaching, medical assisting, business, and psychology. In 2012 there were 21 publicly traded for-profit colleges, and less than a quarter of for-profit college students attended a mom-and-pop operation; the other 1.3 million went to publicly traded or private-equity-owned schools.The profits in this new world were beyond belief. One study found that the for-profit industry netted 55% profit margins between 2000 and 2012. In other words, for every dollar they took from students, 55 cents went to shareholders, with overall profits peaking in 2011 at $5 billion. Within a decade of Apollo's IPO, Phoenix's student body had grown tenfold, and thanks to students' easy federal money, the company was bringing in more than $1 billion a year.It was a win-win for just about everyone involved. The schools' profits came almost exclusively from federal grant and loan moneys. The federal government was bankrolling not only their and their investors' windfalls but also those of the financial institutions and guarantee agencies that did the lending and collecting under the Federal Family Education Loan program.But there were two groups left out of the bonanza: the public at large, whose tax dollars kept the machine running, and the students who got sacked with the bill.Then the evidence started coming in, yet again, that the for-profit corporate darlings of the '90s and aughts were no more sophisticated — certainly no more beneficial — than the shady computer schools that had preceded them. In 1970 there had been only 18,333 students enrolled at degree-granting for-profit schools, less than a quarter of a percent of the total number of college students. By 2009 there were 1.85 million — almost 10% of the total. The grift had grown a hundredfold."I had worked in the sales industry for many years," the admissions supervisor stated. "But Ashford [University] had the most aggressive sales floor I have ever seen." The supervisor's employer was putatively an accredited institution that offered a wide variety of bachelor's and advanced degrees; in reality it was effectively a money-printing operation.The school's many sordid practices were revealed in a 2017 lawsuit filed against the institution by the attorney general of California. Among them were the tales of Ashford's salespeople — aka "admissions counselors" — who made hundreds, sometimes even a thousand, cold calls a week. Still their managers berated and taunted them, forcing underperformers to stand all day, jangling keyrings with the ID cards of their fired former colleagues in their faces. Some of them cried; some had mental breakdowns; eventually most quit or were fired. Managers created "lowest performer lists" and then fired the bottom 10th of recruiters. When the salespeople did manage to land a mark, they celebrated by ringing cowbells or flapping plastic hand clappers. "The sales floor had a true boiler room atmosphere," said the supervisor, not unlike that "portrayed in the movie The Wolf of Wall Street." And if they all misled some naive fools in the process, say, a few hundred a month, well, that was just the cost of doing business. It wasn't like they were going to get fired for calling loans "grants" or promising a program would lead to high-paying jobs or guaranteeing that if things didn't work out at the school, any credits earned there would transfer elsewhere (as they almost certainly would not). One Ashford admissions counselor got 25 violations in eight months and the managers dished out only a slap on the wrist. The risk of punishment by the company's Compliance Department was low, but the reward was irresistibly high: admissions counselors got paid by the sale, and the best of them made in the six figures. Recruiters preyed on their marks' naiveté about higher education, convincing them that they couldn't receive their financial aid until well into the semester (when it would be too late to get a refund), lying about what their degrees would qualify them to do, and encouraging them to spend their federal aid funds on things like cars or expensive vacations (against federal law).Ashford University was owned by Bridgepoint Education, which was backed by Warburg Pincus, a private equity firm. And the secret to its success was a foolproof tactic that for-profit financiers had discovered for getting their business off the ground and gaining access to the all-important stream of federal aid money. The trick was to gobble up existing mom-and-pop proprietary schools — as well as small, financially struggling nonprofits — and to acquire their accreditations, assets as valuable as New York City taxi medallions.But for students, the business model was a bust — at Bridgepoint, just as at any number of for-profit giants. With only seven full-time faculty for almost 74,000 students, Bridgepoint, like many of its competitors, spent way more on recruiting than it did on instruction. And it showed: Only about a quarter of students in any given year went on to get their "diplomas" within six years (public and nonprofit schools consistently graduated about two-thirds of students in that timeframe). Those who did graduate tended to leave with a hefty amount of debt — nearly $35,000 on average. By 2017 almost 20% of alumni were unemployed, and almost half didn't do anything related to their degree.Five years after California filed suit against Ashford, a state superior court judge found that the company had engaged in widespread deception — estimating that over an 11-year period, its recruiters had spread misinformation in more than 1.2 million calls — and issued more than $22 million in penalties. (In 2024, an appeals court reduced the penalty by nearly $1 million).The beneficiaries of Bridgepoint's grift were its shareholders and managing partners. The losers were everybody else. And if theirs wasn't a particularly victimless crime, so what? Nobody cared much about students anyway. "You stop thinking of these students as people," said one recruiting manager.In 2010, Tom Harkin, chair of the Senate's education committee, began a two-year investigation into for-profit schools. Harkin's assessment of the sector was scathing. He declared for-profits expensive, exploitative, and concerned only with their own profits. "They are not focused on the success of their students," Harkin declared.A number of these schools were held by private equity firms like Goldman Sachs. In 2011, one Goldman-backed chain took in more than $350 million in Pell Grant funds and made a little more than that in profit. At a time when the federal government was refusing to help unemployed, down-on-their-luck, and defrauded borrowers, it was bailing out banks like Goldman Sachs twice over: They had already benefited from billions of dollars in Great Recession recovery funds, and now they were scooping up ill-begotten federal student aid via failing for-profit colleges. Fifteen of the schools Harkin's team investigated were publicly traded. These schools received, on average, 86% of their revenues from federal sources, right up to the line of what was legal. One of the ways they did this, Harkin found, was by recruiting veterans. In the years after World War II, legislators reinvented the GI Bill several times to reward veterans of later conflicts, like the Vietnam and Iraq wars, and to adapt to the evolving military, which had become an all-volunteer force in the 1970s. A loophole allowed them to count Defense Department moneys, including GI Bill funds, as non-federal money. In 2009, a Bloomberg News reporter uncovered a tactic used by Ashford University recruiters. They were targeting a wounded warriors unit at Camp Lejeune, signing up veterans with brain injuries who couldn't remember which classes they were taking. Each veteran was a lucrative prospect, allowing schools to gobble up yet more federal funds.And gobble they did. By 2010, Harkin found, for-profits were taking in a third of all GI Bill education funds. But even more shocking, federal money flowing to for-profit schools accounted for 25% of all federal student aid and 47% of eventual loan defaults. This, in spite of the fact that the schools enrolled little more than 10% of all American college students.So what happened to all the extra money for-profits took in? Harkin's investigation found that for-profits spent nearly a quarter of all revenues on marketing and recruiting and often paid their executives multimillion-dollar salaries, far above the average rates for public- or nonprofit-university presidents. Students' money enriched every corner of the for-profit industry except one: quality of instruction.<div type="image" title="Cover image of Burdened: Student Debt and the Making of an American Crisis by Ryann Liebenthal" height="2775" width="1838" msid="113224481" hostid="261" sizebytes="715136"></div>Economist Stephanie Riegg Cellini co-authored a sweeping study of for-profits, which found that students of for-profit certificate programs were slightly less likely to hold a job than their counterparts in public programs. In 2015, a separate study found that job applicants got just as many call-backs by listing no educational experience on their résumés as they did by listing for-profit credentials.When for-profit grads did find employment, Cellini found, they earned about a 10th less than the public program certificate holders. In fact, these for-profit students were actually worse off than if they hadn't gone to school at all. When taking into account their debt loads, for-profit graduates were projected to lose about $1,200 on their educational "investments" over the course of their lifetimes.In short, a simple equation summed up the for-profit ethos at this time: charge as much as federal student aid will supply, and cut costs to the bone. Everything in the middle could be harvested as profit. For-profit education was an industry on the dole.<a target="_blank" class="" href="https://www.businessinsider.com/author/ryann-liebenthal">Ryann Liebenthal</a> is a writer and editor living in Oakland, California, who has reported extensively on the student loan crisis. She is the author of "BURDENED: Student Debt and the Making of an American Crisis."Excerpted from the book "<a target="_blank" href="https://www.harpercollins.com/products/burdened-ryann-liebenthal?variant=41472117669922">BURDENED: Student Debt and the Making of an American Crisis</a>." Copyright © 2024 by Ryann Liebenthal. From Dey Street Books, an imprint of HarperCollins Publishers. Reprinted by permission.

Wall Street tried getting into higher education. Disaster ensued. 

<ul class="summary-list"><li>The Francis Scott Key Bridge in Baltimore collapsed after a container ship collided with it.</li><li>Several entities will likely be on the hook to foot the bill in the aftermath of the disaster.</li></ul>The <a target="_blank" href="https://www.businessinsider.com/francis-scott-key-bridge-baltimore-collapses-after-struck-large-boat-2024-3">Francis Scott Key Bridge</a> in Baltimore collapsed on Tuesday after a large container ship ran into it, leading to six presumed deaths and millions of dollars in possible damage.It's still too early to estimate the total <a target="_blank" href="https://www.businessinsider.com/amazon-fedex-deliveries-baltimore-could-be-impacted-by-bridge-collapse-2024-3">economic impact</a> of the disaster, but between the cost of rebuilding the decades-old bridge, compensating the <a target="_blank" href="https://www.businessinsider.com/baltimore-bridge-collapse-developing-mass-casualty-event-2024-3">victims' families</a>, and paying out damages for disruptions to the supply chain, the eventual cost of the disaster is expected to be significant.<h2>Who will pay to rebuild the bridge?</h2>President Joe Biden said on Tuesday the federal government should be responsible for paying to reconstruct the damaged Francis Scott Key Bridge."It is my intention that the federal government will pay for the entire cost of reconstructing that bridge, and I expect Congress to support my effort," Biden said.The bridge was built in the 1970s for about $60 million, but the cost of rebuilding it could be 10 times its original price tag, an engineering expert told <a target="_blank" href="https://news.sky.com/story/baltimore-trade-implications-from-francis-scott-key-bridge-collapse-as-rebuild-could-cost-600m-13102108">Sky News. </a><div type="image" title="A picture of the Francis Scott Key Bridge in Baltimore, Maryland" height="1414" width="2121" msid="108804526" hostid="261" sizebytes="128986"></div>Baltimore is among the <a target="_blank" href="https://www.businessinsider.com/baltimore-bridge-collapse-halts-shipping-traffic-port-2024-3">busiest ports in the nation</a>, seeing more than a million shipping containers pass through each year. The collapse — which closed the port to all maritime and most road traffic until further notice — is already beginning to wreak havoc on the supply chain.The <a target="_blank" href="https://www.businessinsider.com/baltimore-port-closure-could-cost-15-million-per-day-2024-3">cost of building the bridge</a> back fast enough to offset diversions as much as possible could saddle the government with a more than $600 million bill, David MacKenzie, chair of engineering and architecture consultancy COWIfonden, told Sky News.<h2>Who will pay for damages to the ship and its cargo?</h2>The container ship, <a target="_blank" href="https://www.businessinsider.com/what-we-know-dali-francis-scott-crash-collapse-maryland-bridge-2024-3">the Dali</a>, is owned by a Singapore-based firm. The ship's charterer, Maersk, confirmed to Business Insider that vessel company Synergy Group operates the ship. However, the companies with cargo aboard the Dali will ultimately be responsible for the ship's damages and cargo costs.The Dali was carrying 330 containers, which now must be re-routed, according to <a target="_blank" href="https://twitter.com/typesfast/status/1772756557891297376">Ryan Petersen</a>, CEO of supply chain logistics company Flexport, which had two containers on the ship.An ancient maritime law known as "<a target="_blank" href="https://psabdp.com/psa-bdp-blog/what-is-general-average-and-what-does-it-mean-for-your-cargo">general average</a>" dictates that companies with even a single container aboard a ship have to split the damages pro rata based on the number of containers, ensuring all the stakeholders benefiting from the voyage are splitting the risk, Petersen said.<div type="image" title="Drone footage shows aftermath of the Dali container ship's collision into the Francis Scott Key Bridge in Baltimore, Maryland, on March 26, 2024." height="1152" width="2048" msid="108804527" hostid="261" sizebytes="231942"></div>The principle dates back hundreds of years and was originally meant to ensure sailors on board a ship weren't worried about specific cargo if a disaster required them to start throwing containers overboard, according to Petersen.<h2>Who will pay for everything else?</h2>The majority of the financial fallout is likely to lay primarily with the insurance industry, according to media reports.Industry experts told <a target="_blank" href="https://www.ft.com/content/17cf3f2e-e64d-4666-b1c2-2723347c2ada">FT</a> that insurers could pay out losses for bridge damage, port disruption, and any loss of life.The collapse could drive "one of the largest claims ever to hit the marine (re)insurance market," John Miklus, president of the American Institute of Marine Underwriters, told <a target="_blank" href="https://www.insurancebusinessmag.com/us/news/marine/major-reinsurers-and-pandi-club-on-hook-for-baltimore-bridge-disaster-482812.aspx">Insurance Business.</a>He told the outlet that the loss of revenue from tolls while the bridge is being rebuilt will be expensive, as will any liability claims from deaths or injuries.The Dali is covered by the Britannia Steam Ship Insurance Association Ltd., known as Britannia P&amp;I Club, according to <a target="_blank" href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/reinsurers-marine-market-to-bear-brunt-of-baltimore-bridge-collapse-80988297">S&amp;P Global Market Intelligence.</a>Britannia did not immediately respond to a request for comment from Business Insider but told FT it was "working closely with the ship manager and relevant authorities to establish the facts and to help ensure that this situation is dealt with quickly and professionally."Britannia is one of 12 mutual insurers included in the International Group of P&amp;I Clubs, which maintains more than $3 billion of reinsurance cover, sources familiar with the matter told Insurance Business.Britannia itself is liable for the first $10 million in damages, both FT and Insurance Business reported. Whatever remains is dealt with by the wider mutual insurance group and Lloyd's of London, a reinsurance market in the UK, according to FT.

Here's who could be responsible for paying for the Baltimore bridge disaster 

Floodwaters in river <keyword id="46422" type="General" weightage="100" keywordseo="godavari" source="Orion">Godavari</keyword> started receding, falling below the 25 lakh cusecs mark on Sunday night, but 626 villages in five districts of <keyword id="37102" type="General" weightage="50" keywordseo="andhra-pradesh" source="Orion">Andhra Pradesh</keyword> still remain marooned. <keyword id="407719" type="General" weightage="50" keywordseo="state-disaster-management-authority" source="Orion">State Disaster Management Authority</keyword> Managing Director B R Ambedkar said 97,205 persons were evacuated from flood-hit villages and 84,734 of them were lodged in 191 relief camps. "The inflow and outflow at Sir Arthur Cotton Barrage at Dowaleswaram near Rajamahendravaram remained at 24.74 lakh cusecs. It is expected to go further down but people in habitations along the river course still need to be vigilant till the <keyword id="6369083" type="General" weightage="20" keywordseo="flood" source="Orion">flood</keyword> fully recedes," Ambedkar said in a release. They were closely monitoring the situation from the <keyword id="770140" type="General" weightage="50" keywordseo="state-emergency-operation-centre" source="Orion">State Emergency Operation Centre</keyword> here and taking required measures accordingly, he added. Ambedkar said 256 medical camps were organised in the flood-affected areas to prevent spread of diseases. The receding flood level gave a breather to all concerned as it belied fears that the deluge may soar higher. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/thelife/personalities/news/ashish-chouhan-re-starts-his-second-innings-at-nse-as-its-md-and-ceo/articleshow/92944486.cms">Ashish Chouhan re-starts his second innings at NSE, as its MD and CEO</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/health/booster-shots-important-says-new-study-as-covid-vaccine-protection-is-short-lived/articleshow/92918945.cms">Booster shots important says new study as Covid vaccine protection is short-lived</a>

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Wall Street tried getting into higher education. Disaster ensued.

Ryann Liebenthal

Here's who could be responsible for paying for the Baltimore bridge disaster

Erin Snodgrass

Godavari flood levels recede but over 600 villages are still marooned

PTI

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