Last week we blogged about the student loan scandal, how some schools–especially for-profit institutions–are sucking in billions of taxpayer dollars from federal student loans, even though the majority of their students can never pay them back. One of the biggest offenders is Kaplan, which was caught advising students to apply for loans they didn’t even qualify for. Kaplan is owned by the Washington Post.
The newspaper has admitted that fact in its stories about the scandals. On Sunday the ombudsman Andrew Alexander responded to reader complaints about conflicts of interest when the paper covers stories involving its corporate holdings. Alexander thinks everything is all right as long as the paper is transparent about its financial ties. In his defense of the paper, he let drop a remarkable detail:
via Andrew Alexander – From Kaplan to Buffett, Post gets it right on transparency.
But disclosure of The Post Co.’s ownership of Kaplan is especially critical because of Kaplan’s outsize importance to the overall bottom line. The Kaplan division, which offers higher education, test preparation and professional training services, accounted for 62 percent of The Post Co.’s total second-quarter revenues. Its higher education unit, the subject of government scrutiny and proposed regulations, will be in the news for months to come.
Disclosure aside, a separate issue is The Post’s commitment to following the story. “We will give Kaplan the same level of scrutiny as we give the rest of the industry,” said Emilio Garcia-Ruiz, who runs the local news staff that handles education reporting.
So 62% of the Post’s revenue comes from a questionable college under criminal investigation? That would mean that 62% of the Post‘s revenue comes from the federal government? From taxpayer money? That is to say, cheated taxpayers and bilked students whose defaults will go with them for life?
Not only that, the lead editorial in that same Sunday edition had the effrontery to come out against the President’s plan to cut off federal aid to schools with a smaller pay-back rate of 35%. (Kaplan’s, I was told, is something like 33%.)
Yes, the Post editorial made clear that it owns Kaplan’s. But disclosing a conflict of interest does not mean there is no conflict of interest! Here the editors are using the power of their opinion page to defend their own cash-cow against needed reforms.