Kaplan University: Blood Bank for the Washington Post

Print journalism, in the form of newspapers especially, is in critical shape and has been for some time.  Not only is circulation dropping like swatted flies, but working capital and revenue is drying up as well.  The ‘fourth estate’ has experienced and continues to experience an unprecedented wave of layoffs, bankruptcies and closings and this is expected to continue.    According to Business Insider, in 2009 alone:

You can see a listing of the 105 newspapers that have gone out of business and their holdings at:

Business Insider, Dumpala, P. The Year The Newspaper Died http://www.businessinsider.com/the-death-of-the-american-newspaper-2009-7#ixzz0uuKM685C

Take the 174-year-old Ann Arbor News that printed its last edition the week of July 20th, 2009.  Hit hard by the recession, declining circulation and ad revenue along with the migration of readers to the web, the paper printed its last edition July 23, 2009.  The former historical institution that was the Ann Arbor News is now being replaced by AnnArbor.com, a free website.  The new AnnArbor.com also promised to publish a print edition on Thursdays and Sundays.  According to a report at About.com: Journalism, some of the paper’s newsroom staffers have been hired at the new website.  But they have had to take a pay cut in the process.  The closing leaves of the 174 year old paper leaves Ann Arbor, a town of more than 100,000 and the home of the University of Michigan, without a daily paper (About.com: Journalism, Roberts, T. July 24, 2009Ann Arbor News Closes, Friday July 24, 2009, http://journalism.about.com/b/2009/07/24/ann-arbor-news-closes.htm).

The almost 150 year old Rocky Mountain News closed in Colorado, leaving thousands unemployed to fend for themselves.  The paper, first produced on the banks of Cherry Creek in the state of Colorado back in April 23, 1859 boarded up its doors in February last year with the paper and its workers issuing this sad statement:

“We will scatter. And all that will be left are the stories we have told, captured on microfilm or in digital archives, devices unimaginable in those first days” (Goodbye Colorado, http://www.rockymountainnews.com/news/2009/feb/27/goodbye-colorado/)

To see, in reverse chronological order, about national newspapers closings, bankruptcies & downsizings simply go to (The Year The Newspaper Died http://www.businessinsider.com/the-death-of-the-american-newspaper-2009-7#ixzz0uuKM685C).  The site has outstanding coverage of the papers and a timeline of stories covering the closings.  You can also find more at (“The Race for a Better Read.”).

The collapse of the newspaper industry runs parallel with the collapse of the US economy, although this is not meant to infer cause and effect.  The fact simply remains that as the economy falls, splinters and leaves decimation in its wake, thousands of workers at newspapers, what were once major sources of news and information for many communities, are now faced with the bleak prospect  of no work or little work at all as they scramble to adjust to the move to digital online news.  Couple this with the fact that entire cities now don’t even sport a daily paper.

What about the Washington Post?  Why has it not fallen or gone the way of the crumpled up newspapers around the country?

The rise and fall of the American newspaper owes its history to how newspapers are subsidized.  Newspapers historically paid for themselves with their classified ad sections.  Now, with the advent of free, easy postings online and the infamous Craig’s List, the classifieds have been reduced to a graveyard and newspapers have been left to rely purely on product advertising and this has put them in a revenue free-fall.

However, although Time magazine and other major outlets bemoaned the death of such legendary papers such as the Ann Arbor News and the Rocky Mountain News, just to name a few of the giants that fell 1in 2009, one paper that has been kept out of the revenue busting fray and thus continues to chug along is The Washington Post.  This seems odd, for the Post is no different than many of the 105 papers that have fallen like deadwood in 2009 alone, and it seems a bit strange that the Washington Post does not seem to be in similar revenue difficulties or suffer any economic jeopardy.  The Post puts out both an online and daily paper.  It also puts out the Washington Post magazine, travel news, sports, editorial pages, a Sunday Outlook and a real estate section, to name a few of its famous inclusions (http://www.washingtonpost.com/wp-dyn/content/print/).

Perhaps the answer to how the Washington Post is surviving can be found in the fact that the company and thus the paper does not receive the majority of its revenue from either classified advertising or even advertising itself.  The real story, that the Washington Post will not publish, is that the paper receives the majority of its revenue stream, its life blood, so to speak, from Kaplan University, a for-profit predatory institution that poses as higher education. 

According to the Washington Post Company’s 10-k, filed March 2, 2010 (WOP):

“Kaplan Higher Education generated $1.54 billion in revenue in 2009, 58 percent of the Washington Post Company’s total revenue. The $1.54 billion revenue for Kaplan Higher Education was an increase of $606 million (65 percent) from 2007.

Nearly $1.3 billion (83 percent) of the Kaplan Higher Education’s total revenue came from federal Title IV student aid programs, bringing Kaplan very close to the 90 percent statutory limit. (Note: The 90 percent limit applies only to student loans and federal grants in the Higher Education Act. It does not apply to federal veterans’ higher education programs or workforce investment funds.)

Kaplan Higher Education’s operating costs were approximately $274.8 million for 2009” (Here’s a link to the SEC 2010 10-k annual report from the Washington Post March 2, 2010 filed with the Security and Exchange Commission
http://tiny.cc/xvqzt, take a look at page 5 and 6
).

This year, the financial magazine Barron’s figured that The Washington Post Co. is worth about $8.5 billion — and $5 billion of that value is from Kaplan (Kaplan University: A For-Profit Take On Education, NPR, May 6, 2010, http://www.npr.org/templates/story/story.php?storyId=126564748).

According to the 2010 SEC 10-k filing by the Washington Post Company:

“Kaplan, Inc., a subsidiary of the Company, provides an extensive range of education and related services worldwide for students and professionals. Effective in the third quarter of 2009, Kaplan reorganized its operations into four segments: Kaplan Higher Education, Kaplan Test Preparation, Kaplan International and Kaplan Ventures. The following table presents the net revenue for the three years ended December 31, 2009, 2008, and 2007 for each of Kaplan’s reportable segments The Washington Post Company SEC Filings( ( WASHINGTON POST CO filed this Form 10-K on Mar. 02, 2010http://www.washpostco.com/phoenix.zhtml?c=62487&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDExOTMxMjUtMTAtMDQ1ODA2L3htbA%3d%3d):

(in millions)   Year Ended December 31  
  2009     2008     2007  
Kaplan Higher Education   $ 1,539.6      $ 1,160.1      $ 933.3   
Kaplan Test Preparation     445.0        507.1        554.8   
Kaplan International     537.2        545.1        442.2   
Kaplan Ventures     124.2        126.2        105.8   
Kaplan Corporate and Intersegment Eliminations     (9.4     (6.9     (5.2
         
Net Revenue   $ 2,636.6      $ 2,331.6      $ 2,030.9   
         

 

The SEC filing goes on to note that in terms of revenue for Kaplan:

“During 2009, funds received under Title IV programs accounted for approximately $1,283 million, or approximately 83%, of total Kaplan Higher Education revenues (Title IV programs encompass various forms of student loans, with the funds being provided either by the federal government itself or by private financial institutions with a federal guarantee protecting the institutions against the risk of default. In some cases, the federal government pays part of the interest expense), and 49% of Kaplan, Inc. revenues. The Company estimates that funds received from students borrowing under third-party private loan programs comprised approximately 1% of its higher education net revenues.

Beginning in 2008 and continuing through 2009, as the private loan market deteriorated, Kaplan Higher Education provided loans directly to some Kaplan students under a third-party institutional loan program. Lending under Kaplan’s institutional loan program totaled approximately 1% of its higher education net revenue in 2009. Direct student payments, funds received under various state and agency grant programs and corporate reimbursement under tuition assistance programs accounted for most of the remainder of 2009 Kaplan Higher Education revenues. The significant role of Title IV funding in the operations of Kaplan Higher Education is expected to continue (ibid).  The Washington Post is being run by federal taxpayer subsidized Title IV loans.

Not only did 83% of the revenue of the company, Kaplan Inc., come from publicly funded Title IV guaranteed taxpayer loans, but Kaplan International, a subsidiary of the company, has been busy as well.  Kaplan International includes Kaplan Europe and Kaplan Asia Pacific.  The sites where the ‘services’ Kaplan provides are located in England, Wales, Mexico, Australia, Ontario, South Africa, India, New Zealand, China, Ireland, Germany, Columbia, France, The British Virgin Islands, Switzerland, Hong Kong, Pakistan, Nigeria, Cyprus, and many more.

There is also Kaplan Ventures, another part of the company:

“The Kaplan Ventures division manages and develops businesses in markets adjacent to Kaplan’s core educational businesses. Kaplan Ventures’ management provides these businesses with industry expertise and management support with a view toward the long-term strategic benefits these businesses may provide to Kaplan. In 2009, the Kaplan Ventures division included Kaplan EduNeering, Kaplan Compliance Solutions, Education Connection, Kaplan IT Learning, The Kidum Group and Kaplan Virtual Education” (ibid).

What services or products from Kaplan, Inc. does the venture division offer?  According to the 10-k filed with the SEC:

“Kaplan EduNeering provides online regulatory compliance training and learning management systems technology principally for businesses in the pharmaceutical, medical technology, health care, energy, telecom and defense-related industries. During 2009, Kaplan EduNeering provided services to more than 1.5 million users at approximately 376 companies.

Kaplan Compliance Solutions (“KCS”) assists insurance carriers, agencies and broker/dealers with their licensure and/or registration filings and assists its clients in compliance with myriad national and state-level regulatory requirements applicable to these industries. During 2009, KCS provided services to more than 700 companies.

Kaplan IT Learning provides certification preparation, assessment, learning services and software to help individuals and organizations train on software applications and prepare for technical certifications in the information technology industry. During 2009, Kaplan IT Learning delivered more than 160,000 certification preparation practice tests.

The Kidum Group, headquartered in Tel Aviv, Israel, provides test preparation courses for Israeli high school graduation exams, university admissions exams and the GMAT. Kidum also provides English-language courses at 11 permanent centers located throughout Israel as a franchisee of Wall Street International, which is a provider of English-language training to corporations and individuals at locations outside the U.S. During 2009, Kidum provided courses to approximately 30,000 students.

Kaplan Virtual Education (“KVE”) operates charter and private virtual schools that offer online instruction to students in grades 6 through 12. KVE also provides instructors and curriculum and manages virtual schools for 19 school districts throughout the U.S. At year-end 2009, KVE was providing courses to approximately 3,850 students (ibid).

Then there is Kaplan Test Preparation.  Who are they and what do they do?

“Kaplan Test Preparation (“KTP”) includes the following businesses: Test Preparation and Tutoring; Professional and Licensure; and Kaplan Publishing. Each of these businesses is discussed briefly below.

Test Preparation and Tutoring

The test preparation and tutoring business prepares students for a broad range of college and graduate school admissions examinations, including the SAT, ACT, LSAT, GMAT, MCAT and GRE. During 2009, these courses were offered at numerous locations throughout the U.S., Canada, Puerto Rico, Mexico, London and Paris. KTP also offers courses online, which are delivered in a live online classroom and a self-study format. In addition, KTP licenses material for certain of its courses to third parties and a Kaplan affiliate, which, during 2009, offered courses at 55 locations in 11 countries outside the U.S. KTP also offers programs and services, including college admissions examination preparation courses, directly to schools and school districts for students in kindergarten through 12th grade. These offerings were provided through Kaplan’s K12 Learning Services business, which, in the first quarter of 2010, was integrated into KTP’s business. In July 2009, KTP launched Kaplan Tutoring, which offers individualized live tutoring and customized online programs for children from kindergarten through 8th grade” (ibid).

Finally there is Kaplan Publishing which is operated separately from Kaplan Professional Publishing.  It publishes a variety of general trade and educational books in subject areas such as test preparation, business, law, medicine and nursing. At the end of 2009, Kaplan Publishing had nearly 550 books in print, more than 330 e-Books and 20 mobile applications for smart- phones (ibid).

Where’s the story?  Kaplan is a vampiric blood bank

If we stick to the metaphor that Kaplan Higher Education is the blood bank for the Washington Post, then we can see how the paper has managed to stay afloat.  Just where does the blood bank, Kaplan Higher Education, get the supply of blood money it needs to keep the Washington Post Company and their newspaper on a permanent transfusion?  The answer can be found in the business practices of the for-profit predatory colleges themselves.

According to the 10-k filing with the SEC:

“The proportion of Kaplan Higher Education’s revenue from certificate and associate degree programs is composed of a higher percentage of Title IV funds than is the case for its bachelor’s and other degree programs. A majority of Kaplan Higher Education students are enrolled in certificate and associate degree programs. Kaplan Higher Education is taking various measures to reduce the percentage of its receipts attributable to Title IV funds, including emphasizing direct-pay and employer-paid education programs, encouraging students to carefully evaluate the amount of Title IV borrowing, and developing additional professional development and continuing education programs. Although Kaplan is taking steps to address compliance with the 90/10 Rule, there can be no guarantee that these measures will be adequate to prevent the 90/10 Rule calculations from exceeding 90% in the future (ibid) (italics mine)

This translates into corporate vampiric necessity and no better vampire victims can be found than students, many of them poor, minority students and working people who sign up for the questionable courses and degrees the institution offers.   They pay heady fees for the diplomas Kaplan sells; that is if they don’t end up in default.  Then it is you and I who pay.

As I chronicled at (http://dissidentvoice.org/2009/12/private-predatory-colleges-how-the-neoliberal-alchemists-turn-debt-into-profit-and-citizens-into-fools/) back in 2009, for-profit predatory colleges have for years marketed to the disenfranchised, the down and out, the sub prime students and thus they make up the ‘fringe economy’ of other such predators like Cash Loans, Pay Day Loans, Title loans for cars, Check Cashing scams and the like. These ‘operations of higher predation’ have been caught recruiting students at housing projects, welfare office, unemployment offices, launder mats in poverty stricken areas and now, yes the true down and out – the homeless and often drug addicted segments of our population, mostly minority.  They actually enter homeless shelters where they rabidly prey and feed on the underclass of America (For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector’s stock: the next big economic bubble (For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector’s stock: the next big economic bubble. July 19, 2010.  dailycensored.com, http://dailycensored.com/2010/07/19/14027/). 

My experience posing as a would-be student found myself in the lap of Kaplan’s recruitment efforts – a rugged bunch of recruiters with cell phones, smarmy radio voices, and aggressive marketing tactics.  My phone rang daily for weeks by Kaplan recruiters and financial aid ‘advisors’; e-mails were sent to me on a regular basis by the cattle ranching Kaplan recruiters and as I write in Dissidentvoice.org, Kaplan was at the forefront of many of the predatory colleges that called me in their seemingly ceaseless efforts to try to recruit me with hard sell language.  This is no surprise, for as a blood bank for the Washington Post, Kaplan’s thirst for blood profits means it must find blood donors and they are best found among the most vulnerable.  Their blood comes in the form of publicly financed student loans, as mentioned above, and these loans are defaulting now with rapidity, directly threatening the larger economy.  They are not the next big bubble to burst; they are the current economic big bubble thta is now bursting.

The Kaplan unit of Washington Post Co. had seven campuses at or above the 30% mark in defaults as of December 2009 (For-Profit Schools See More Defaults, December 14, 2009. Wall Street Journal.  http://online.wsj.com/article/NA_WSJ_PUB:SB126075983194590097.html). 

For their part, the for-profit schools and their spokespeople say the higher default rates among their coterie reflect the lower-income students, minority and working adults who attend the institutions. They note that community colleges, with a similar clientele, have above-average defaults.  Yet by the Wall Street Journal’s calculation, community colleges had a 16% default rate, almost half that of Kaplan. 

Abby Hunt, a spokesperson for Kaplan, blamed the ‘quality of students that attend” the college — stating that Kaplan’s students are typically:

“underserved working adults with limited financial means, factors that increase loan default rates.  She named several ways in which Kaplan was attempting to improve its default rate, including improving students’ completion rates, providing financial counseling and enrolling fewer students who are likely to drop out (Kaplan, Ashford students among Iowa’s worst loan Associated Press. January 1, 2010.defaultershttp://qconline.com/archives/qco/display.php?id=473540).

In Iowa, Kaplan University in Davenport and Ashford University in Clinton had some of the highest default rates, averaging 16.9 percent overall compared with the 19.5 percent national average (ibid).

In Pennsylvania, it was found recently that almost one of every five students in 112 for-profit schools in Pennsylvania defaulted during the three years ended in September of 2009. About one in 14 students at 195 traditional schools in the state quit repaying their loans, statistics compiled by the Department of Education revealed.  No surprise that one of the worst default rates belongs to the Kaplan Career Institute, Downtown. About 38 percent, or 395 students, defaulted on their loans, the second worst rate in the state. The school offers classes in health care, law and business.  Kaplan Inc. spokeswoman Michele Mazur said none of the company’s schools, including the one Downtown, has been dropped from the government’s loan program (Student loan defaults rack up in Pennsylvania, Thomas Olson, PITTSBURGH TRIBUNE-REVIEW, January 31, 2010, http://www.pittsburghlive.com/x/pittsburghtrib/business/s_664888.html).

All over (and we could go state by state), be it in Pennsylvania or Transylvania, we find Kaplan one of the leaders in creating student default rates beyond comprehension.  And they do this by seeking out the poor and disenfranchised.  This is Kaplan’s clientele; this is where the vampire company gets its blood bank to keep the Washington Post open for business and curiously answers the question as to why the paper has not folded as so many others have.  The company preys on the working class, poor, and people of color with promises of a brighter future if they buy their degree from Kaplan and in this way they boost their revenue and siphon off blood to the Washington Post

It is quite easy for the for-profit sector to argue, through its lobbyists, spokespeople and think tanks that low-income, minority students are the culprits when it comes to answering the question as to why the default rate is so high in the for-profit category of colleges and universities.  Blaming the bloodless victims fits nicely into the company’s business plan which is to receive an ever greater share of the federal Title IV grants that are guaranteed by the US taxpayer (as the 10-k from the Washington Post Company, notes above) as ‘too big to fail’.  When the defaults do occur, not only are they not dischargeable in bankruptcy court for the poor suckers who took them out, but they are then tossed on the side of the taxpayer bail-out ledger where working people’s taxes are used to pay off the defaults through outright bail-outs of the defaults, well after Kaplan and others have absconded with the cash and then quickly left the scene of the crime.  Defaults at for-profit colleges like Kaplan are far higher than in non-profit or public institutions.

As I noted in a recent article:

“You see, such disadvantaged students are desirable for the for-profit colleges because they qualify for federal grants and loans, which are largely responsible for the prosperity of the predators.  Federal aid to students at for-profit colleges jumped from $4.6 billion in 2000 to $26.5 billion in 2009. Publicly traded higher education companies derive three-fourths of their revenue from federal funds, with Phoenix at 86%, up from just 48% in 2001 and approaching the 90% limit set by federal law.  And the fact of the matter is that although the default rate is climbing through the roof (see: Predatory for-profit colleges and universities: the escalating default rate for student loans. July 13, 2010. http://dailycensored.com/2010/07/13/predatory-for-profit-colleges-and-universities-the-escalating-default-rate-for-student-loans/), the more bodies the colleges can ‘ranch’ the more money they make.  When the students default and go back to alcoholism, drugs abuse, lock-down programs, mental institutions, prisons or the streets, you the taxpayer pay the government 97% of the loan, for you are covering the bet the students will graduate and pay their loan obligations, a bet not even Las Vegas would touch” (For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector’s stock: the next big economic bubble (For-profit predatory colleges and universities prey on the homeless while hedge fund operators get busy shorting the sector’s stock: the next big economic bubble. July 19, 2010.  dailycensored.com, http://dailycensored.com/2010/07/19/14027/).

Blaming students for the default rates after your company has spent millions of dollars in an attempt to recruit such clientele is not only cold blooded; it is tantamount to blaming a rape victim after a sexual assault.  It is incorrigible.  Yet this is what these institutions do; that and wrangle students into the schools through high pressured sales pitches and soft cushioned lies about a more favorable future with a ‘Kaplan’ degree.  Kaplan is no different than their counterparts, as my experience and others show — perhaps they are actually even worse. 

David Hawkins, director of public policy and research at the National Association for College Admission Counseling notes:

“At a for-profit college, if you look at some of the reports to the Securities and Exchange Commission, you will see that the advertising budget is immense … on par and even sometimes exceeding the instructional costs of the institution.”. (His group represents traditional colleges and universities) (Kaplan University: A For-Profit Take On Education, NPR, May 6, 2010, http://www.npr.org/templates/story/story.php?storyId=126564748).

Kaplan is truly the vampire blood bank that is keeping the Washington Post alive by exploiting taxpayers and students alike.  Vampire economics has replaced voodoo economics as these ‘disaster’ schools work throughout the world to sell ‘education’ as a commodity while they rake in government money and propagandize free market economics.  They rely on neo-liberal government policies of readily available taxpayer ‘cash’ or ‘blood’, as the metaphor demands, for their sordid business plans.  The blood siphoned off from students and taxpayers by Kaplan is then banked in the form of profits and eventually transfused throughout the Washington Post to keep the paper from becoming a bird stained cage catcher for avian droppings. 

Thus, while the amount of defaults rises for the for-profit ‘colleges and universities’, like Kaplan, we as taxpayers find ourselves subsidizing the Washington Post through hefty default bail-outs of the failed Kaplan institutions that spend as much as 25% of their revenue marketing to would-be students.

Kaplan University Violates the Law?

In the middle of last year, 2009, four separate whistle-blower lawsuits that accuse Kaplan Higher Education of violating the law in obtaining federal student aid.  The cases were consolidated before a single federal judge in Florida (4 False-Claims Lawsuits Against Kaplan Are Consolidated. June 11, 2009. Goldie Blumenstyk http://chronicle.com/article/4-False-Claims-Lawsuits-Aga/47312/). 

These suits are nothing new.  You might call them the ‘cost of doing business’ for Kaplan and its parent company, The Washington Post Company.  The internet is full of websites and claims by students who state they have been defrauded by the company and college.  One such website is Kaplan University Review Rip-off report (Report: #554083  Report: KAPLAN UNIVERSITY, KAPLAN UNIVERSITY Kaplan Online University Lawsuit False Claims Internet, http://www.ripoffreport.com/private-schools/kaplan-university/kaplan-university-kaplain-onli-ca5af.htm).  This is just one site, there are countless more.

As a notorious vampiric institution, Kaplan may now be running into deep trouble as new rules are promulgated by the Department of Education in response to the neo-liberal economic practices of Kaplan and others.  We will look at the new ‘rules and regulations’ adopted by the federal government early last week when it comes to dealing with the for-profit predatory sector of education that trades on the New York Stock Exchange, just like for-profit prisons do.  This will be covered later this week at www.dailycensored.com.

We will also be looking at the CHI/Kaplan Surg Tech program.  With abuses mounting for the college and students and whistleblowers willing to come forward to file cases against the colleges and their practices, the CHI/Kaplan program called Surg Tech must be rigorously examined for fraud.  Allegations I have received is that CHI/Kaplan lied to students and failed to provide the necessary promises built into its qualification program for students to successfully receiving a diploma. 

If you are a former Surg Tech student at CHI/Kaplan or know anything about the program, especially from 2006 until 2009, please contact me at weilunion@aol.com.  I will never release your name. 

We need a Wikileaks to stop the practices of these rogue institutions.  I am currently working with both accrediting agencies and others to uncover more about this particular program offered by Kaplan.  I promise readers that news will be forthcoming this week, after we have taken a chance to look at the weak-kneed regulations that the Department of Education has now called for after years of allowing these predatory piranhas to operate with impunity.

Finally, if Kaplan is put out of business, as it should be, we can be sure to see the deliquescence of the Washington Post as it adds its name to the growing newspapers that now line shelves, cover glassware for packing purposes, or are used to catch what many of them should be catching – the proverbial bird droppings that falls at the bottom of the cage.