Saturday, July 07, 2012

How the Washington Post Survives: (Hint) Government subsidies

Not direct subsidies of course, but just the same, without them the paper would fold. What I'm talking about is a wholly owned subsidiary called Kaplan University. Kaplan is for-profit university similar to Capella University and the University of Phoenix with most of its 66,000 students studying online. The Washington Post bought Kaplan a decade ago in what now looks like an incredibly shrewd move. Kaplan accounted for 58 percent of the company's revenue — and it was profitable. In contrast, newspaper and magazine publishing accounted for only 19 percent of revenue, and those activities lost money. Barron's reports that the Washington Post Co. is worth about $8.5 billion — and $5 billion of that value is from Kaplan.

So, one of the country's most influential newspapers survives and Kaplan educates thousands, what could possibly be wrong with that?

Critics claim Kaplan operates vocational training programs that over enroll students using Federal loans that leave low-income student indebted and unemployed. A quick search online and one can easily find hundreds upon hundreds of complaints lodged against Kaplan for financial abuse and impropriety regarding student billing practices. Also, Kaplan is known to market directly to black single mothers with three children or more - that is what the training manuals for their telemarketers actually instruct them to do - as this is the demographic which defaults at the highest rate. Not coincidentally, they have one of the highest default rates of any such university, only about thirty percent of their enrollees actually earn a degree. Yet they still collect the full amount from the federal government. This is what is said to keep the Washington Post afloat.

With the Post Co. raking in the kind of money they get from an operation like this, you begin to understand that the newspaper is a mere sideline - a tax write-off. It's all a bit unseemly for a reputable guardian of the people - "the press" to operate an outfit like this. Some of this is just coming to light in the last few years as reports that their training manual's also directs their telemarketers to target returning Iraq and Afghanistan vets, because, basically, they're dupes with lots of government benefits to drain. It's been alleged more money, real estate, and staff are directed to their telemarketing operations, than to their actual educational faculty and operations. The allegations have some weight. "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," says David Hawkins, director of public policy and research at the National Association for College Admission Counseling.

There have been official investigations into specific Kaplan programs and like any operation with vested interest in getting government money they have deflected, obfuscated and misled their students and the government. In 2007 the Department of Education (DOE) began looking into the allegations of Title IV fraud on behalf of Kaplan. Suddenly, in late 2008, SurgeTech program curiously disappeared from Kaplan’s degree offerings even though it was one of the college’s most popular programs.  At the time the program vanished we now know state accrediting agencies were threatening to withdraw accreditation.

The program in question, one of their most profitable disappeared overnight. Interesting. Why? It seems that Kaplan knowingly, over a ten year period, misled by omission, prospective students, their accrediting body, and the U.S. DOE causing the government to approve tens of millions of dollars of Title IV student loans for a program that students would be unable to finish. All this based upon false data.

Meanwhile Kaplan, and their investors and shareholders skated to the bank on government subsidies and the Washington Post conveniently concealed the story.
The university system, both private and public have become a massive special interest group, whose actual interest is the government student loan gravy train. They overwhelmingly support Democrats and liberals who promise more and more government spending on "higher education". With one of the most important newspapers in the nation involved at this level we can be assured that reporting on abuse of the financial aid system will be squelched.

Guardians of the people huh, keeping the government honest. Yeah. But who is going to keep them honest