Many readers might be wondering about the incessant coverage of for-profit predatory colleges and universities like Kaplan or the Phoenix University, to name just a few. The reason for the non-stop coverage is due to the incessant lobbying and profit taking on behalf of the one percent who own these colleges and seek to profit at any cost by allowing them to run roughshod over students, citizen taxpayers and lawmakers. Also, with one trillion dollars in private student debt that is now surpassing credit card debt it is important to follow the ‘next bubble’ so that we are prepared when it bursts. This is keeping with the non-stop coverage of the housing bubble that many thought would never burst. Many writers and pundits were warning of such a burst well before 2008 when the ‘crash’ took place. We hope that readers see the importance of such coverage and Daily Censored is committed to offering it as time goes by. Transfers of wealth from taxpayers to Kaplan shareholders and executives could exceed one billion dollars, while students are left with inadequate education and a veritable worthless degree, not to mention they are tethered to the carpet loom of debt for much of their lives.
In this article we look briefly at Kaplan University’s attempt to extort Congress using students as pawns.
Washington Post Co. used Kaplan students as a pawn to threaten Congress
In the Washington Post Company’’s 2011 annual report (released March 2011), the Post threatened to raise tuition for the disadvantaged students they purport to serve if Congress did not rescind the 90/10 rule. The 90/10 rule states that any post secondary educational institution which obtains more than 90% of revenues from Title IV student loans may lose eligibility for such loans in the future (Unintended Consequences of the 90/10 Rule?, Bennett, D. February 10, 2010, The Center for College Affordability and Productivity, http://collegeaffordability.blogspot.com/2010/02/unintended-consequences-of-9010-rule.html). Kaplan wants more than 90% of its profits subsidized by taxpayers and is fighting tooth and nail to assure that it can get its hands on more taxpayer monies.
The problem, according to the Washington Post 2011 annual report, is that Kaplan University had a ratio of 91.7% at the time the report came out (1.7% more than the 90 percent allowed by the government) and was at risk of losing access to the federally subsidized student loan money which is the life blood of the Washington Post Company and its shareholders. From the annual report we read that:
“Given that schools do not control, and generally may not limit, student lending, one of the more effective methods of reducing the 90/10 rule percentage is to increase tuition prices above the applicable maximums for Title IV student loans and grants, requiring other sources of funding to cover the remaining tuition balance, in order to reduce the percentage of revenue from Title IV sources. Although modification of the 90/10 rule could limit this potential undesirable impact on tuition, there is no assurance that the Department of Education, or Congress, will address this problem” (US Security and Exchange Commission, Washington Post (Filer) CIK: 0000104889 (see all company filings), http://www.sec.gov/Archives/edgar/data/104889/000119312511053497/0001193125-11-053497-index.htm).
The first part of the statement was a not so thinly veiled threat aimed at Congress indicating that Kaplan would raise tuition on poor and disadvantaged students if they did not get their way:
“one of the more effective methods of reducing the 90/10 rule percentage is to increase tuition prices above the applicable maximums for Title IV student loans and grants, requiring other sources of funding to cover the remaining tuition balance” (ibid).
The second part of the statement also threatened to blame Congress for the cost of tuition:
“Although modification of the 90/10 rule could limit this potential undesirable impact on tuition, there is no assurance that the Department of Education, or Congress, will address this problem” (ibid).
The statements were an act of attempted extortion or ‘stong-arming’ on behalf of a for-profit company. Kaplan was attempting to hold students hostage because they know that those already enrolled at Kaplan cannot necessarily change schools due to the fact that Kaplan credits are often not transferable to other universities. The statement did, however, reveal two interesting truths about Kaplan University: First, most students are unwilling to pay 10% of the education cost to attend Kaplan. Second, Kaplan pegs the cost of tuition to Title IV loan maximums to assure that it can profit from taxpayer largess and neo-liberal policies.
Apparently Donald Graham and WaPo subsidiary, Kaplan University, believe laws should be changed to accommodate their business profit maximization needs. In a November 7th, 2003 Wall Street Journal article entitled: “Kaplan Transforms Into Big Operator Of Trade Schools” by Daniel Golden and Matthew Rose, the authors described how Kaplan lobbied Congress to repeal the 50% rule (Kaplan Transforms Into Big Operator Of Trade Schools: Washington Post Co. Unit, Known for Test Coaching, Bets on Online Learning, November 7, 2003, http://online.wsj.com/article/SB106815531020138300.html?mod=home%255Fpage%255Fone%255Fus). The 50% rule was another onerous regulation, in the eyes of the for-profit university and college industry, that required for-profit colleges providing distance education to offer at least half of instruction in classrooms to be eligible to receive federal aid (John Boehner Backed Deregulation Of Online Learning, Leading To Explosive Growth At For-Profit Colleges Kirkham, C. July 29th, 2011, The Huffington Post, http://www.huffingtonpost.com/2011/07/29/john-boehner-for-profit-colleges_n_909589.html). Kaplan and other for-profits hate the rule for it means they must spend monies on labor in the form of teachers and personnel and this of course dampens profits for shareholders.
While Donald Graham claims to serve the needs of disadvantaged students, the same Wall Street Journal article of 2003 portrayed Mr. Graham as a man mainly concerned with cheap and easy revenues for Kaplan, which he is still chiefly interested in. The WSJ article also reported:
“At the parent company’s annual meeting last May, Mr. Graham said, “Kaplan continues to go gangbusters.” and ” Mr. Graham saysWashingtonPost executives used to joke about Kaplan reaching $1 billion in revenue, “because it seemed so wildly unlikely.” Now that goal seems within reach, and “He (Graham) says one reason Washington Post has focused on educational acquisitions is that television stations and other media properties it might otherwise seek to acquire have grown too expensive. “Given prices in media, education has been the bulk of where we have had to grow, and I love the way Kaplan grows,” he says (ibid).
The article went then depicted Kaplan as similar to a boiler room operation, which it is. The writers noted at the time:
“Kaplan instructs its sales people to read to prospective students from a script that says, “I’ve reviewed your self-evaluation, and it appears you have many of the characteristics that successful online students possess.” and One-third of sales representatives’ annual pay increase depends on how many prospective students they enroll. If they miss goals for more than two quarters, they can lose their jobs” (ibid).
While Elijah Cummings and Dick Durbin seek to investigate the for-profit university segment of society (http://dailycensored.com/2011/12/12/washington-post-pays-kaplan-ceo-76-million-while-students-left-50000-in-debt-and-senator-durbin-calls-for-investigation-into-for-profit-predatory-college-ceo-pay/), Kaplan is busy hurling veiled threats at Congress in an attempt to score public relations points. The problem, of course, is that they use students as pawns to attempt to extort the government into ‘laying off’ and giving them full access to the public trough, uninhibited by pesky rules and regulations and they also use taxpayer monies to lobby Congress to assure profit maximization even if this means less than 9% of their students graduate. This is neo-liberal economics. Will they be successful?
US Security and Exchange Commission, Washington Post (Filer) CIK: 0000104889 (see all company filings), 2011, http://www.sec.gov/Archives/edgar/data/104889/000119312511053497/0001193125-11-053497-index.htm
Unintended Consequences of the 90/10 Rule?, Bennett, D. February 10, 2010, The Center for College Affordability and Productivity, http://collegeaffordability.blogspot.com/2010/02/unintended-consequences-of-9010-rule.html
John Boehner Backed Deregulation Of Online Learning, Leading To Explosive Growth At For-Profit Colleges Kirkham, C. July 29th, 2011, The Huffington Post, http://www.huffingtonpost.com/2011/07/29/john-boehner-for-profit-colleges_n_909589.html).
Kaplan Transforms Into Big Operator Of Trade Schools: Washington Post Co. Unit, Known for Test Coaching, Bets on Online Learning, November 7, 2003, http://online.wsj.com/article/SB106815531020138300.html?mod=home%255Fpage%255Fone%255Fus
http://dailycensored.com/2011/12/12/washington-post-pays-kaplan-ceo-76-million-while-students-left-50000-in-debt-and-senator-durbin-calls-for-investigation-into-for-profit-predatory-college-ceo-pay/