Dear Shareholder,

We've come a long way in the ten years since November of 2003, when Bridgepoint began operations as a very small company with just seven employees, a few students, and very little revenue. Since that time, we have grown to become a meaningful part of the higher education landscape in the US, with over 60,000 currently enrolled students and a growing body of more than 65,000 alumni — a testament to how far we have come and to how many lives we have touched and changed through education.

Our growth can be traced to the value proposition we have always offered, which has been grounded in the affordability, quality, and innovation around the student experience. In 2012 and 2013, we strengthened the student value proposition considerably.

WASC Accreditation

“We have grown to become a meaningful part of the higher education landscape in the US.”

Of course, the highlight of 2013 was Ashford's successful migration to WASC accreditation. In its letter approving Ashford, WASC stressed the importance of the University's continued focus on retention improvement efforts and was accompanied by positive comments from the WASC visiting team, which acknowledged the educational quality Ashford offers. Among many positives, of particular note is the visiting team's comment that Ashford had established a number of "best practices" and had created "…what can become a model for online higher education for a non-traditional student population."

Attaining this sort of recognition from a regional accreditor is no small accomplishment, and it was achieved only after an extraordinary effort by Ashford president Dr. Richard Pattenaude and the University's staff, faculty and Board of Trustees. Serving the non-traditional student with a quality education is a goal our institutions have always pursued, and thus it is especially gratifying to me that, in addition to receiving WASC accreditation, WASC made complimentary comments about the institution Ashford has become. A copy of the WASC action letter and special visit team report from the review of Ashford University is available on the WASC website at www.wascsenior.org.

The commitment to quality and student success noted by WASC was demonstrated in multiple ways in 2013. For example, through the Orientation Program, the Ashford Promise, and other means, we have increased admissions standards to help ensure that the students who are admitted have the best chance to be successful. Continuing a practice we had already established, we are expanding the use of technology to provide better support to students, which was also recognized and applauded by WASC. This expanded use of technology includes expanded use of Waypoint and Constellation as well as analyzing over 3.5 million student performance data points every day to track, evaluate, and help students succeed. This data provides us with an "early warning system" for each individual student that helps identify problems the student is facing and positions us to assist high risk proactively.

"Over the past eight quarters, we have seen a 50% increase in the portion of [Ashford’s] enrollment applications that have come from organic channels.”

Attracting Quality Students

2013 was also a year of progress in several other important areas. The enrollment declines Ashford University experienced beginning in late 2012 and throughout 2014 were due in large part to an intentional shift in our marketing mix in favor of branding and other "organic" channels — where students initiate an inquiry directly with us after hearing about our degree programs. This shift included a nearly 60% reduction in our admissions counselor workforce, as well as strengthened admissions requirements intended to provide a greater assurance that incoming students are better positioned to persist and complete their degree programs.

We implemented this approach because we have evidence that students who learn about Ashford and initiate contact directly with us are better prepared for college, learn course material better, and are more likely to persist in their studies through graduation than students who come to us from third party inquiries. Our strategy is working: over the past eight quarters, we have seen a 50% increase in the portion of our enrollment applications that have come from organic channels.

Forbes™ School of Business at Ashford University

As another example of how we are strengthening our brand identity while simultaneously creating value for students, in 2013 we announced that Ashford's business school was renamed the Forbes School of Business. The association with Forbes providing the University and its students with access to Forbes' rich online archives, curated talent pool of authors and guest lecturers, an extensive global network, including approximately 1,200 international contributors, and unique scholarship opportunities. We also plan to embed Forbes content within the program to enhance the business curriculum in a manner that leads to better student education outcomes and improved retention.

We believe this new affiliation with such a highly respected business brand as Forbes will attract high quality students, and as such, should lead to increased new and total enrollments in the school of business.

More Graduates, Less Debt

“91% of graduates indicated that they were satisfied or very satisfied with their Ashford experience.”

Another important highlight for 2013 was the graduation of a record number of students — well over 17,000 for both of our institutions, bringing our total alumni population now to well over 65,000. In addition to their success at earning their degrees, our institutions' alumni carry less debt on average than graduates from other institutions. For 2013, I am pleased to report that on average, Ashford's Bachelors' degree graduates have school-related debt that is approximately $3,000 below the national average of over $29,000. This favorable result is the outcome of Ashford's historical commitment to offering affordable tuition, as well as our focus on helping our students transfer qualified credits into their programs at Ashford.

Our Students and Alumni Agree

All of us in the Bridgepoint family are proud of what we are accomplishing for our students and of the fact that we earned accreditation from WASC. But what do our students and alumni think? For the 5th year running, we have completed a survey of Ashford's graduates, which we believe again demonstrates Ashford's success at delivering important outcomes to its graduates.

  • Of the 80% of alumni who reported having previously attended a traditional institution, 92% feel the quality of education at Ashford is the same as, or higher than, at a traditional college or university. This result does not stand in isolation, since in WASC's own survey of nearly 23,000 Ashford students, 91% of respondents said they are satisfied or very satisfied with the quality of instruction they are receiving at Ashford;
  • In our survey, 93% said that they would recommend Ashford to others seeking their degree;
  • 91% of our graduates indicated that they were satisfied or very satisfied with their Ashford experience;
  • 89% of our alumni agree that earning their degree from Ashford gave them the confidence to pursue new job opportunities; and finally,
  • 92% of alumni agree that earning their Ashford degree was worth the time commitment required to fulfill their educational goals.

We also ask our alumni about how they view the return on their investment in their education, as measured by their salaries before and after attending Ashford. Based on alumni survey responses reported in 2014 from our bachelor-degree earners, we estimate that the average salary of these alumni is 9.6% greater than the average salary they were earning when they first enrolled at Ashford. Our graduate-degree earners do even better: we estimate the average salary of these alumni is 11.7% higher than their average salary upon first enrolling at Ashford. These survey results reaffirm that an Ashford education is creating a positive return on investment for our alumni. At a time in our nation when the incomes of many families are stagnant or even declining, we continue to be pleased with the value proposition offered by an Ashford degree and the benefit it is bringing to the lives of our alumni and their families.

Developments at University of the Rockies and the BPI Products Group

“Our students’ success will always be the foundation of our success as a company.”

Now comfortably at home and recognized in Denver as well as Colorado Springs, University of the Rockies has established the Denver Instructional Site — a top-of-the-line facility for on-site instruction, and the University recently added three new degree programs to its current program offerings.

2013 was also a year of growth for our BPI Products Group. Every day, this group is looking at new ways we can innovate and make a difference — consistently striving for excellence and using the power of technology to better serve students inside and beyond our institutions through platforms like Waypoint and Thuze.

Improving our Financial Positioning

In parallel with the developments I mentioned above, we made some significant financial changes in 2013. Cost reductions were implemented that did not affect academic quality or student service levels but better reflect our current level of enrollment and, more importantly, position us for the future growth.

In December, we completed the repurchase of 10.25 million shares of common stock for a total cost of approximately $201 million. This reduced the number of shares outstanding and will thereby provide a boost to our earnings per share in the future. After this repurchase, we still had cash, cash equivalents, and investments of more than $350 million, which we believe is more than adequate to carry out our strategic plan and respond to opportunities as we may discover them.

Positioning Students -- and the Company -- for Success

Although we have said this before, I think it bears repeating that the essence of our student value proposition is the purposeful positioning of our institutions at the intersection of affordability, innovation and quality. These are important differentiating factors that are attractive to high quality prospective students when choosing among alternatives for higher education. Once on board, our institutions' students and alumni agree: in survey after survey, they rate the quality of their education as being equal to or greater than experiences at previous traditional institutions. As indicated by alumni surveys, our focus on quality has translated into tangible success for our students in the form of increased earnings potential once they graduate.

Our students' success will always be the foundation of our success as a company. We are passionate about changing lives and are strong believers in the transformational power of education. We are confident that the changes we made in 2012 and 2013 are positioning our students, institutions, and company for long term success.

Sincerely,
Andrew S. Clark

President and Chief Executive Officer
April 2014