In his August 4th testimony before the Senate’s Committee on Health, Education, Labor and Pensions, Government Accountability Office (GAO) official Gregory D. Kutz offered an earful of scandalous stories about how for-profit, post-secondary institutions use misrepresentation, fraud, and generally unethical practices to tap the federal loan and grant-making trough. One of these companies, so says the Washington Post itself, is Kaplan Inc, a profit-making college that contributes a whopping amount to the paper’s bottom line (67 percent of the Washington Post Company’s $92 million in second quarter earnings, according to the Washington Examiner; 62 percent according to the Post’s Ombudsman Andrew Alexander).
One might assume that the Post’s deep financial involvement in Kaplan Inc. would prompt its editorial board to recuse itself from comment on new proposed federal regulations designed to correct the problems. Instead of offering “point-counterpoint” op-eds on this issue, this bastion of journalistic integrity has launched a veritable campaign in support of its corporate education interests, and offered up its op-ed page to education business allies. It is a sad and disappointing chapter in the history of this once-great institution.
This story emerged from a GAO effort to shine a light on the financial aid practices of 15 profit-making colleges, using investigators posing as students. What they found has been widely reported: four of the 15 urged GAO’s “applicants” to submit false information about their financial resources — helping them falsify federal aid forms, and asking them to misrepresent information about dependents and family finances.
All 15 engaged in corrupt practices, such as providing inaccurate information about the college, overstating projected earnings for specified degree or certificate-holders, flooding prospective students with promotional phone calls, and charging more than non-profit institutions for comparable credits. For example, 14 of the 15 colleges GAO visited were more expensive than non-profit institutions located in the same geographic area.
Despite all the federal largesse, graduation rates and loan payback rates at the for-profit institutions remain woefully low. Annually, some $24 billion in government funds gets pumped into these operations, which enroll less than 10 percent of postsecondary students in the U.S. Only 23 percent of first time students graduate at Kaplan and, according to Department of Education estimates, only 28 percent of former Kaplan students are repaying their loans (as compared, on a national basis, to 36 percent for profit-makers and 54 percent for public institutions here).
The GAO’s report may have been the final straw for California officials, who just cancelled an agreement with Kaplan, citing concerns that it could have a “negative effect” on Kaplan students who transferred to a state university campus and “could not get credit for the Kaplan course.” Of course, it could be that the state had second thoughts about the 42 percent “discount” the company was offering students, which reduced costs to about $216 a credit. In contrast, California students pay $26 a credit at their local community colleges.”
While we can’t calculate the exact numbers, it appears clear that Kaplan Inc. is getting some pretty hefty change from the federal grants and loan programs and, in return, not delivering for its students. If that’s not bad enough, over a quarter of Kaplan’s students are saddled with what might be unnecessary debt.
And all of this has benefited the Washington Post’s bottom line. That’s fine – the Post has a right to invest in other companies, and one would be hard pressed to find any industry that is not at least potentially affected by a national newspaper’s coverage.
There is only one problem – while some of its coverage of this issue has been straightforward, the Post has also been using its editorial platform to misrepresent the findings of the GAO report, and even worse, advocate against regulation of for-profit colleges. The proposed regulations require all loan receiving for-profit institutions to have a student repayment rate of at least 45 percent.
The opening salvo came on August 11 when Steven Pearlstein admitted that Kaplan’s “handsome profits” have “helped to cover this newspaper’s losses,” and “although we in the Post newsroom have nothing to do with Kaplan, we’ve all benefitted from its financial success.” He then shifts his focus to public non-profits, claiming, wrongly, that they cost more than profit makers. Pearlstein offers other unconvincing and uncorroborated assertions, especially given the GAO revelations, including that “the real potential of for-profit schools is their focus on teaching and learning . . .” In the final analysis, according to Pearlstein, a major culprit is “the incomes and job security of the tenured faculty” in “traditional universities.”
Sweating from all this brouhaha, the Post ran two opinion pieces on Sunday, August 22nd. The first, from its ombudsman, Andrew Alexander, is self-righteously headlined, From “Kaplan to Buffet, Post Gets it Right on Transparency.” Alexander runs through an account of all the up-front reporting from the Post on its holdings, its interests, its guilt — but nary a word on its accountability and its outright opposition to the new accountability regulations proposed by the Department of Education.
That was only the beginning.. There is also an assault from the Post’s lead editorial on the same day. In an appeal to the Obama administration, the Post argues that the Ed Department’s newly proposed regulations would limit students’ choice options. In so-doing, says the Post, the Ed. Department would be going against its own goal to give more students access to higher education, and that fairness requires that the same rules should apply to profit-makers and non-profits alike (on the last of these we totally agree).
Indeed, the Post charges that if the data released by the Ed Department Friday “are used without further refinement, the effect will be to deprive many working students of their best option for higher education.” This argument is not only preposterous (working students’ “best option” is to be misled and saddled with debt?), it is inappropriate for the Post to use its editorial page to argue in its own direct financial interests.
Moreover, these editorial fabrications of what the data say are about on a par with the Post’s editorial policy for education in general: ideology over data, objectivity and reason. In this instance, as in others, the Post defends market-driven education — especially when its own bottom line is at stake. Then, as if to fire one more shot in both anger and self-interest, yesterday the Post ran an opinion piece by the President of Strayer College, another for-profit institution threatened by the GAO revelations. It looks like the Post is ginning up a coalition of profit-makers against accountability in the regulations fight, with itself in the lead.