The Washington Post & the student loan scandal

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:

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.

via Andrew Alexander – From Kaplan to Buffett, Post gets it right on transparency.

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.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • http://www.bikebubba.blogspot.com Bike Bubba

    You mean the same paper that publishes editorial after editorial supporting greater federal funding depends on federal funding for its profits?

    Time to sack the editorial board for that one!

  • http://www.bikebubba.blogspot.com Bike Bubba

    You mean the same paper that publishes editorial after editorial supporting greater federal funding depends on federal funding for its profits?

    Time to sack the editorial board for that one!

  • http://www.toddstadler.com/ tODD

    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?

    Whoa-oa-oa! Nice shootin’, Tex!

    “The Kaplan division” includes Kaplan Higher Education, Kaplan Test Preparation, Kaplan International and Kaplan Ventures. “Kaplan Higher Education” includes Kaplan University, as well as 73 other Kaplan Higher Education Campuses. Kaplan Higher Education comprised 58% of the revenue of Kaplan, Inc. in 2009. And 52% of Kaplan Higher Education’s revenue itself came from Kaplan University.

    So what is 52% of 58% of 62%? 18.7%. Let’s use that number in context: “So 18.7% of the Post’s revenue comes from a questionable college under criminal investigation?” Ah, facts. So nice.

    “That would mean that 62% of the Post‘s revenue comes from the federal government?” Er, no. It’s not even (necessarily) true that 18.7% of the Post’s revenue comes from the federal government. The only revenue that comes from the government is that based on federal student loans (I don’t feel like looking up what percentage of Kaplan University’s tuition initially comes from that; someone else do some research). More honestly, the only money that comes from the government and remains so derives from defaulted federal student loans. And, contrary to Veith’s unattributed 33% number, Kaplan’s annual report says, “Based on the 2008 draft cohort default rates, we expect Kaplan University’s 2008 fiscal year cohort default rate to be between 15% and 17%, and the overall Kaplan Higher Education rate to be between 16% and 18%.”

    All information taken from Kaplan’s 2009 annual report.

  • http://www.toddstadler.com/ tODD

    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?

    Whoa-oa-oa! Nice shootin’, Tex!

    “The Kaplan division” includes Kaplan Higher Education, Kaplan Test Preparation, Kaplan International and Kaplan Ventures. “Kaplan Higher Education” includes Kaplan University, as well as 73 other Kaplan Higher Education Campuses. Kaplan Higher Education comprised 58% of the revenue of Kaplan, Inc. in 2009. And 52% of Kaplan Higher Education’s revenue itself came from Kaplan University.

    So what is 52% of 58% of 62%? 18.7%. Let’s use that number in context: “So 18.7% of the Post’s revenue comes from a questionable college under criminal investigation?” Ah, facts. So nice.

    “That would mean that 62% of the Post‘s revenue comes from the federal government?” Er, no. It’s not even (necessarily) true that 18.7% of the Post’s revenue comes from the federal government. The only revenue that comes from the government is that based on federal student loans (I don’t feel like looking up what percentage of Kaplan University’s tuition initially comes from that; someone else do some research). More honestly, the only money that comes from the government and remains so derives from defaulted federal student loans. And, contrary to Veith’s unattributed 33% number, Kaplan’s annual report says, “Based on the 2008 draft cohort default rates, we expect Kaplan University’s 2008 fiscal year cohort default rate to be between 15% and 17%, and the overall Kaplan Higher Education rate to be between 16% and 18%.”

    All information taken from Kaplan’s 2009 annual report.

  • http://www.toddstadler.com/ tODD

    Sorry, that would be the 2009 annual report for The Washington Post Company.

  • http://www.toddstadler.com/ tODD

    Sorry, that would be the 2009 annual report for The Washington Post Company.

  • Pingback: Your taxes keep the WaPo afloat? | kainos

  • Pingback: Your taxes keep the WaPo afloat? | kainos

  • Joanne

    The Post is an organization that espouses classical western liberal values and exercises classic western capitalism. The president is a Marxist. Liberals have an affinity for Marxists. Marxists do not have an affinity for liberals. Liberal wealth is being redistributed. Conflicted liberals, imagine and pretend. Unconflicted Marxists make it happen.

    The president is giving the liberals the courage of their convictions.

  • Joanne

    The Post is an organization that espouses classical western liberal values and exercises classic western capitalism. The president is a Marxist. Liberals have an affinity for Marxists. Marxists do not have an affinity for liberals. Liberal wealth is being redistributed. Conflicted liberals, imagine and pretend. Unconflicted Marxists make it happen.

    The president is giving the liberals the courage of their convictions.

  • http://www.toddstadler.com/ tODD

    Joanne (@5), I’m trying to make sense of your argument, and how it fits into this discussion (such as it is). … I got nothing. Did you read the article and the discussion?

    “The president is a Marxist.” Oh, really? That’s … fascinating. I also heard Bush was a fascist. Can you confirm that as well?

  • http://www.toddstadler.com/ tODD

    Joanne (@5), I’m trying to make sense of your argument, and how it fits into this discussion (such as it is). … I got nothing. Did you read the article and the discussion?

    “The president is a Marxist.” Oh, really? That’s … fascinating. I also heard Bush was a fascist. Can you confirm that as well?

  • Michael Aguirre

    In light of the recent involvement of the Department of Justice in the lawsuits filed against Kaplan and the GAO’s report on for-profit schools’ fraudulent actions, please find below an article from the San Diego Reader that mentions Mr. Jajdelski’s case that was filed more than 6 1/2 years ago regarding the actions of Kaplan and he is the Relator for all of these cases and also below is a copy of an email from Mr. Aguirre. I also have a pdf of the actual filing in the court of Nevada regarding the case against Kaplan that I would like to send you.

    I am sure you will find this information valuable and insightful.

    If you have any questions or require further information, please contact:
    Michael J. Aguirre, Esq., CA SBN 060402
    maguirre@amslawyers.com

    Maria C. Severson, Esq., CA SBN 173967
    mseverson@amslawyers.com

    Aguirre, Morris & Severson LLP
    444 West C Strert, Suite 210
    San Diego, CA 92101
    619-876-5364

    —–Original Message—–
    > From: michael aguirre [mailto:maguirre@amslawyers.com]
    > Sent: Saturday, June 19, 2010 7:49 PM
    > To: ‘Hatch, Timothy J.’
    > Cc: ‘chris.greene@ed.gov’
    > Subject: KAPLAN
    >
    >
    > Tim, thanks for taking time to talk with me on Friday. It is clear you have a comprehensive understanding of the facts. I was interested in your observation that Kaplan has been viewed by the Department of Education Inspector General as having assisted in the DOE investigation of overpayments to Kaplan, Las Vegas. I had not previously known that Kaplan was required to refund Title IV funds to the Department of Education from its Las Vegas operations following the Relator’s having disclosed his claim to the Department of Education. I was surprised to learn from you that there had been a settlement reached between the Department of Education and Kaplan. Do you know if there was a reason why the Court was not informed of the settlement? I can see from your website that you specialize in False Claims involving Title IV funds. Is this typical to have the Department of Education and defendants in False Claims cases settle without telling the Court. Would you be kind of enough to identify all parties from the Department of Education who participated in the matter leading up to the settlement as well as those involved in the settlement? Also would you please identify anyone from the Department of Justice who participated? I assume you are the only Gibson attorney who participated. If other Gibson attorneys participated would you identify them as well?
    >
    > Would you please provide the details of the settlement? Was there a report issued? Was there a written settlement agreement? May we have a copy of any settlement agreement? We would also ask you to provide us with any communications related to the investigation and settlement, excluding attorney client or work product privileged writings? I request that you file with the Court a complete disclosure document regarding the settlement agreement and related facts.
    >
    > Finally, I would like to note the following amounts of Title IV funds paid to Kaplan in addition to those identified in the operative complaint.
    > In 2005 Kaplan derived more than $500 million of its revenues from Title IV funds. In 2006 Kaplan derived $580 million of its revenues from Title IV funds. In 2007 Kaplan Title IV revenue was $745 million, or approximately 73%, of total KHE revenues. In 2008 Title IV funds accounted for $904 million, or approximately 71%, of total KHE revenues. During 2009 Title IV funds accounted for $1.283 billion million, or approximately 83%, of KHE revenues.
    >
    > Again, thanks for your candor. Mike Aguirre

    For-Profit College Stocks Whacked Again
    By Don Bauder | Posted August 6, 2010, 5:00 p.m.

    Stocks of for-profit colleges got slaughtered again today (Aug. 6) as the federal government appeared to be making bold steps to do something about the huge default rates at such schools. San Diego’s Bridgepoint Education plunged 5.25% to $14.98. It was $27.22 on April 20. Washington Post stock plummeted $31.05 or 7.6% to $377.56. The Post’s Kaplan for-profit education operation accounts for two-thirds of the company’s revenue and operating income. The U.S. Senate heard testimony about a General Accounting Office investigation finding dubious recruiting tactics, high default rates and low graduation and job placement rates at Kaplan and 14 other institutions, according to Yahoo! Post Chief Executive Officer saw video shot by undercover investigators of misrepresentations by Kaplan’s admissions representatives. Graham found them “sickening” and vowed reform.
    A Congressional committee headed by Sen. Tom Harkin asked 30 for-profits for information. Bridgepoint said it was among them. It has been investigated by the Department of Education’s Office of Inspector General. There has been no final report on that probe.
    Former San Diegan Charles Jajdelski is suing Kaplan in Nevada federal court. He began working at Kaplan-owned Maric College in San Diego, then transferred to Vegas when Kaplan bought an institution there. Among many things, Jajdelski says that he saw Kaplan officials destroying diplomas “because the students were phantom,” says San Diego attorney Mike Aguirre, one of three lawyers representing Jajdelski. He reported findings of massive irregularities to Kaplan officials and was fired. He also turned over his findings to the federal government. He is suing on employment-related claims.

    http://www.sandiegoreader.com/weblogs/financial-crime-politics/2010/aug/06/for-profit-college-stocks-whacked-again/

  • Michael Aguirre

    In light of the recent involvement of the Department of Justice in the lawsuits filed against Kaplan and the GAO’s report on for-profit schools’ fraudulent actions, please find below an article from the San Diego Reader that mentions Mr. Jajdelski’s case that was filed more than 6 1/2 years ago regarding the actions of Kaplan and he is the Relator for all of these cases and also below is a copy of an email from Mr. Aguirre. I also have a pdf of the actual filing in the court of Nevada regarding the case against Kaplan that I would like to send you.

    I am sure you will find this information valuable and insightful.

    If you have any questions or require further information, please contact:
    Michael J. Aguirre, Esq., CA SBN 060402
    maguirre@amslawyers.com

    Maria C. Severson, Esq., CA SBN 173967
    mseverson@amslawyers.com

    Aguirre, Morris & Severson LLP
    444 West C Strert, Suite 210
    San Diego, CA 92101
    619-876-5364

    —–Original Message—–
    > From: michael aguirre [mailto:maguirre@amslawyers.com]
    > Sent: Saturday, June 19, 2010 7:49 PM
    > To: ‘Hatch, Timothy J.’
    > Cc: ‘chris.greene@ed.gov’
    > Subject: KAPLAN
    >
    >
    > Tim, thanks for taking time to talk with me on Friday. It is clear you have a comprehensive understanding of the facts. I was interested in your observation that Kaplan has been viewed by the Department of Education Inspector General as having assisted in the DOE investigation of overpayments to Kaplan, Las Vegas. I had not previously known that Kaplan was required to refund Title IV funds to the Department of Education from its Las Vegas operations following the Relator’s having disclosed his claim to the Department of Education. I was surprised to learn from you that there had been a settlement reached between the Department of Education and Kaplan. Do you know if there was a reason why the Court was not informed of the settlement? I can see from your website that you specialize in False Claims involving Title IV funds. Is this typical to have the Department of Education and defendants in False Claims cases settle without telling the Court. Would you be kind of enough to identify all parties from the Department of Education who participated in the matter leading up to the settlement as well as those involved in the settlement? Also would you please identify anyone from the Department of Justice who participated? I assume you are the only Gibson attorney who participated. If other Gibson attorneys participated would you identify them as well?
    >
    > Would you please provide the details of the settlement? Was there a report issued? Was there a written settlement agreement? May we have a copy of any settlement agreement? We would also ask you to provide us with any communications related to the investigation and settlement, excluding attorney client or work product privileged writings? I request that you file with the Court a complete disclosure document regarding the settlement agreement and related facts.
    >
    > Finally, I would like to note the following amounts of Title IV funds paid to Kaplan in addition to those identified in the operative complaint.
    > In 2005 Kaplan derived more than $500 million of its revenues from Title IV funds. In 2006 Kaplan derived $580 million of its revenues from Title IV funds. In 2007 Kaplan Title IV revenue was $745 million, or approximately 73%, of total KHE revenues. In 2008 Title IV funds accounted for $904 million, or approximately 71%, of total KHE revenues. During 2009 Title IV funds accounted for $1.283 billion million, or approximately 83%, of KHE revenues.
    >
    > Again, thanks for your candor. Mike Aguirre

    For-Profit College Stocks Whacked Again
    By Don Bauder | Posted August 6, 2010, 5:00 p.m.

    Stocks of for-profit colleges got slaughtered again today (Aug. 6) as the federal government appeared to be making bold steps to do something about the huge default rates at such schools. San Diego’s Bridgepoint Education plunged 5.25% to $14.98. It was $27.22 on April 20. Washington Post stock plummeted $31.05 or 7.6% to $377.56. The Post’s Kaplan for-profit education operation accounts for two-thirds of the company’s revenue and operating income. The U.S. Senate heard testimony about a General Accounting Office investigation finding dubious recruiting tactics, high default rates and low graduation and job placement rates at Kaplan and 14 other institutions, according to Yahoo! Post Chief Executive Officer saw video shot by undercover investigators of misrepresentations by Kaplan’s admissions representatives. Graham found them “sickening” and vowed reform.
    A Congressional committee headed by Sen. Tom Harkin asked 30 for-profits for information. Bridgepoint said it was among them. It has been investigated by the Department of Education’s Office of Inspector General. There has been no final report on that probe.
    Former San Diegan Charles Jajdelski is suing Kaplan in Nevada federal court. He began working at Kaplan-owned Maric College in San Diego, then transferred to Vegas when Kaplan bought an institution there. Among many things, Jajdelski says that he saw Kaplan officials destroying diplomas “because the students were phantom,” says San Diego attorney Mike Aguirre, one of three lawyers representing Jajdelski. He reported findings of massive irregularities to Kaplan officials and was fired. He also turned over his findings to the federal government. He is suing on employment-related claims.

    http://www.sandiegoreader.com/weblogs/financial-crime-politics/2010/aug/06/for-profit-college-stocks-whacked-again/

  • http://www.geneveith.com Gene Veith

    Mr. Aguirre,

    Many thanks for your comment and the additional information you have brought us. (Sorry that your comment got held up, due to the number of links.)

  • http://www.geneveith.com Gene Veith

    Mr. Aguirre,

    Many thanks for your comment and the additional information you have brought us. (Sorry that your comment got held up, due to the number of links.)

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “So what is 52% of 58% of 62%? 18.7%. Let’s use that number in context: “So 18.7% of the Post’s revenue comes from a questionable college under criminal investigation?” Ah, facts. So nice.”

    Hey, good catch, tODD.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “So what is 52% of 58% of 62%? 18.7%. Let’s use that number in context: “So 18.7% of the Post’s revenue comes from a questionable college under criminal investigation?” Ah, facts. So nice.”

    Hey, good catch, tODD.

  • Joanne

    Some (Marxists?) define fascism as the cooperation between the state and large private corporations to control the economy and make lots of money. Title IV funds are enriching a large corporation and its share holders. Is that fascism by this defination? If Marxists would call this fascism, wouldn’t they be moving heaven and earth to shut it down, even if the major beneficiaries of the wealth transfer were classic western liberals?

    n.b. I define fascism, as people use the term to define what happened in Fascist Italy and National Socialist Germany, 1930-45, as two particular forms of socialism.

  • Joanne

    Some (Marxists?) define fascism as the cooperation between the state and large private corporations to control the economy and make lots of money. Title IV funds are enriching a large corporation and its share holders. Is that fascism by this defination? If Marxists would call this fascism, wouldn’t they be moving heaven and earth to shut it down, even if the major beneficiaries of the wealth transfer were classic western liberals?

    n.b. I define fascism, as people use the term to define what happened in Fascist Italy and National Socialist Germany, 1930-45, as two particular forms of socialism.

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