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Kaplan, Inc

By Matthew Yglesias  

"Kaplan, Inc"

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The Washington Post company is most identified with its newspaper, the Washington Post. But in fact its biggest source of revenue is its Kaplan subsidiary. Kaplan, in turn, is primarily identified with test prep work. In fact, however, its low-performing for-profit university unit is its biggest source of growth as Tamar Lewin points out in an excellent NYT piece:

Over the last decade, Kaplan has moved aggressively into for-profit higher education, acquiring 75 small colleges and starting the huge online Kaplan University. Now, Kaplan higher education revenues eclipse not only the test-prep operations, but all the rest of the Washington Post Company’s operations. And Kaplan’s revenue grew 9 percent during the last quarter to $743.3 million — with higher education revenues more than four times greater than those from test-prep — helping its parent company more than triple its profits. [...]

According to 2009 data released this summer by the Department of Education, only 28 percent of Kaplan’s students were repaying their student loans. That figure is well below the 45 percent threshold that most programs will need to remain fully eligible for the federal aid on which they rely. By comparison, 44 percent of students at the largest for-profit, the University of Phoenix, were repaying their loans.

So to clarify, the basic business model of the Washington Post Company’s key business unit is as follows. They say “in exchange for paying us money, we’ll provide you education services that pay off in the long run.” Potential customers think that sounds like a good proposition, and they avail themselves of taxpayer-subsidized loans in order to take the Post up on their offer. But 72 percent of the Post’s customers find that they’re actually unable to repay those taxpayer-subsidized loans.

Fairly reasonably, the Obama administration has proposed that taxpayers stop subsidizing programs with dismal performance rates. That way educational entrepreneurs at places like the Post will have to work on making sure they’re delivering some real value to their customers. Also quote reasonable, the Post would prefer to keep on getting free money from taxpayers and thus “spent $350,000 on lobbying in the third quarter of this year, more than any other higher-education company.”

But what’s more, Donald Graham has personally “gone to Capitol Hill to argue against the regulations in private visits with lawmakers” and just to make the full scope of his interest in the issue clear “[h]is newspaper, too, has editorialized against the regulations.” Meanwhile, it looks like the new GOP majority in the House of Representatives has decided that taxpayer subsidies to low-performing for-profit colleges like Kaplan is one of the forms of wasteful government spending they like. And presumably every member of congress is now on notice that the city’s most influential newspaper is prepared to go to bat for its corporate partners.

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