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September 29, 2012 4:55 PM Is Obama killing the Washington Post?

By Simon van Zuylen-Wood

Today’s Washington Post, surely with a heavy heart, reported that the company was shutting down nine of its Kaplan college campuses, while consolidating four others. Wash Post owns Kaplan, which runs for-profit colleges and test-prep services. This news comes on the heels of the company’s latest earnings report, which found that Kaplan-generated revenue had fallen 84%, due in large part to declining college enrollment.

The Post purchased Kaplan in 1984, and by ‘07, Kaplan accounted for half the company’s revenue, essentially keeping the company afloat amid flagging print advertising and subscription numbers. Now, Kaplan’s struggling too, and bringing the Post’s balance sheet down with it.

Though Kaplan has been struggling for several years now, a big reason for that seems to be the Obama administration’s own recent crackdown on for-profit colleges. In June 2011, the Administration announced it would pull funding from schools whose students’ debt/income ratio was too high; this past July, it identified nearly 100 for-profit schools in danger of losing that aid. Essentially, the idea behind the regulations was to prevent for-profit schools from preying on vulnerable students (using slick advertisements and get-educated-quick schemes), by saddling them with debt their new degrees wouldn’t help them pay off. If they even finished with a degree.

As Suzy Khimm wrote earlier this summer:

“There is little evidence of a return to any certificate or degree from a for-profit,” the researchers write in a new paper for the National Bureau of Economic Research. By contrast, students who receive degrees “from a public or not-for-profit institution receive a large wage premium,” they explain, boosting their earnings by as much as 15 percent.

Kaplan’s for-profit colleges, as Vanity Fair reported in April, are no exception.

In recent years, as many as 30 percent of Kaplan Higher Education students were defaulting on their loans within three years. Kaplan has been sued by several former employees, accusing the company of activities such as cooking the books on job-placement rates to ensure continued eligibility for federal student-aid programs.

To add insult to injury, Kaplan’s higher ed division feeds on federal government funds, with 90% of their cash coming from Education Department grants. So they’re soaking us too.

All this would be easier to stomach if it wasn’t bringing down the Post with it. On one hand, it seems Obama administration efforts are working; shady for-profit schools are getting their comeuppance. On the other hand, because the Post entered a partnership 30 years ago with a company that looked very different than it does today (no higher-ed involvement), it’s suffering at the hands of successful liberal reform.

Makes one wish Graham hadn’t let Mark Zuckerberg back out of the Post’s 2005 agreement to invest in Facebook. If the Post had retained the share it was originally due, according to one estimate, it might have brought in as much $7 billion dollars, more than twice the current market capitalization of the company.

Simon van Zuylen-Wood is a writer for Philadelphia Magazine.

Comments

  • c u n d gulag on September 29, 2012 5:20 PM:

    Pardon me, if I don't cry sad, salty, tears over this mess.

    Graham, like the just now deceased "Punch," at the NY Times, presided over the greatest period of American journalism in history.

    And when both of them stepped down, they left their great papers in the hands of their obsequious children, sycophants, and/or evil nincompoop's.

    And running a higher education grift, and its demise, is nothing than I could ever mourn - not in this economic point in our nation's history.
    It's smart, in this case, that the Government DIDN'T let the market decide.

    It's hard to feel sorry for smart people who were this short-sighted.
    And, sorry, Fred Hiatt, I don't consider you to be one of the smart people - you're a sycophantic, Conservative jack@$$, who needs to be fired for hiring other Conservative sycophantic jackasses.

    Sorry, if this offends anyone.

  • Nancy Cadet on September 29, 2012 5:21 PM:

    For profit colleges are horrible, and they embarked on a fierce lobbying campaign this year when there was a chance that Federal aid or loan rules would be tightened .

    I teach at a public urban community college, and I see the false promises of for-profits everywhere I go: they promise easy courses with no remediation for English or math, they promise jobs and career skills, and it's so easy for a fraudster to game the system to "enroll" needy students and use the financial aid For their own purposes. Statistics show that students at for profit colleges graduate with a lot of debt.


    Many progressive bloggers call the Wa Post "Kaplan." it's a revenue stream that cheats many instructors and students .

  • tsts on September 29, 2012 5:26 PM:

    "All this would be easier to stomach if it wasn’t bringing down the Post with it."

    Huh? What are you smoking? If it makes the Post disappear, that is an added benefit. What an evil piece of cr*p polluting our national discourse. Krauthammer, Cohen, Samuelson, Gerson, Hiatt, etc. Good riddance!

  • jjm on September 29, 2012 5:34 PM:

    Well, the Post has tried to make up for its really bad choice of direction by hiring some real talent for Ezra Klein's blog, and Greg Sargent as well. Until I found them, however, I had given up on WaPo as a lost cause: it had nothing but longing for the old Bush days when the owners and editors and reporters must have been invited to all the bashes as long as they went easy on the guys in that woebegone administration...

    The fact that a premier journal would need, or think that it needs, to turn to questionable for profit enterprises like Kaplan, which is hardly the worst of them, is a very sad commentary on the skewed values of a financialized society, the very thing Romney represents to the max.

  • James on September 29, 2012 5:37 PM:

    Ummm. You say:

    On the other hand, because the Post entered a partnership 30 years ago with a company that looked very different than it does today (no higher-ed involvement), it's suffering at the hands of successful liberal reform.

    Seems like the Post is responsible for why it "looks very different," no? Mismanagement by the Post might be why it has gone downhill? Mismanagement by Post people who didn't know what the hell they were doing? Turned a formerly valuable testing company into a money-grubbing diploma mill on government funds? If no, who IS responsible for the debacle? Ohhh OBAMA DID IT!

    I hope the Washington Post goes bankrupt right along with Kaplan. They will get no tears and regret from this corner. Worthless newspaper, worthless diploma mill. And thousands of jobless graduates with mountains of undischargeable debt. Bah.

    (and sorry, the Post put out ONE good story. It was *never* a "great newspaper." Just had great reporters, most of whom were bought out long ago. What remains are a cabal of neocon hacks, and a few mediocre reporters. IMHO.)

  • James on September 29, 2012 5:40 PM:

    Sorry, dropped formatting. "Graph beginning with On the other hand, because the Post entered a partnership" is a quote.

  • Rrk1 on September 29, 2012 6:23 PM:

    Like some others, I have a problem shedding any tears over this development. For-profit colleges, like for-profit hospitals, are parasites on the back of society and should be banned. I realize that in our market-driven madness that will never happen, but reigning them in is one of the good things Obama has done.

    As for the WaPo, Donald Graham must have his mother turning in her grave. He's turned a decent newspaper into a right-wing rag, as well as partnering with a malign operation like Kaplan. Obviously his business sense sucks otherwise he would have stuck with Facebook when he had the chance. He could redeem himself, but he won't fire the likes of Krauthammer, Cohen, and all the other right-wing hacks who call themselves journalists. Liberal media indeed.

  • PTate in MN on September 29, 2012 6:47 PM:

    What "tsts" said.

    Ezra Klein & Greg Sargent are the exceptions. The WP is a worthless, neo-con rag, and it deserves to go under. This is a good example of how the free market works. Produce crap, get known for producing crap, people stop buying what you have to sell.

  • Steve LaBonne on September 29, 2012 6:53 PM:

    Are you kidding, Simon? That sorry pile of fishwrap can't go out of business fast enough.

  • exlibra on September 29, 2012 8:51 PM:

    My (now deceased) husband and I dropped the Wash Rag and switched to the NYTimes in 2000, and the only thing I ever missed about the WaPo is its font.

    Kaplan isn't its only example of scummy enterprise; you must have forgotten how they tried to set up those little "access dinners" a few years back, where journalists were supposed to serve as a conduit between lobbyists and the Congress critters.

    If WaPo goes under because of their Kaplan side, I won't shed a tear. RIP. In early seventies, it was a good paper, but not in any recent years.

  • Texas Aggie on September 29, 2012 9:22 PM:

    I have to agree with all the comments about the quality of the WaPo. It has certainly gone downhill over the last 15 - 20 years, and has tried to make up for it with gimmicks. That they are competing with the Washington Times to see who can be the Fox of the print world is just another reason that they should go down. No tears.

  • low-tech cyclist on September 29, 2012 9:54 PM:

    If there isn't a revenue stream from Kaplan to keep the WaPo above water, then maybe Graham should sell the newspaper to Josh Marshall for a nominal amount. Marshall could keep Sargent, Ezra & Co., and the handful of decent reporters (there are some at WaPo), toss the rest, and publish TPM (augmented with Sargent etc.) under the WaPo masthead. That would be a win all around.

    But the WaPo as it is? Worthless.

  • Rich on September 29, 2012 10:31 PM:

    My understanding is that the Post has always been an uneven paper. When I came in 1990, that was certainly true--laughable sports section, little local news (and an obvious fear of Marion Barry), awful movie reviews, etc. It's strength was the Style section and its coverage of the federal govt. Now, the local coverage is still terrible, although they liked the last mayor, most of the features remain weak, but the national news coverage has suffered, partly from the departure of people of varying talent, but also because so many of those who remain are obviously reliant on GOP Hill staffers. For most of the '00s the federal column was written by a guy who was obviously in the tank for management and Bush appointees with a tin ear for how government really functions. The paper clearly has failed to cultivate the kind of mid-to upper level civil officials that have always been good sources of leaks and background even as most feds truly distrust the press.

    The paper could probably cut its losses by gutting most of the op-ed page, although some of the bigger names probably get paid by the WaPo syndicate rather than the paper. I'd imagine that declining papers have lower budgets for bloviators, anyway. Greg Sargent seems to be doing ok, but Ezra Klein seems well on his way to hackdom and EJ Dionne has been drifting that way for years.

    The Kaplan empires' decline is well deserved. The paper's decline and its obviously bloated headquarters (offices for the long departed like Ben Bradlee) show a clear lack of leadership, just compounded by Weymouth's many stumbles. The Post still has a surprising amount of goodwill among long-time DCers, but people who've seen other things know that it fails as a regional paper and as a national one.

  • Sheldon on September 29, 2012 10:50 PM:

    Let me add to the chorus: Any paper that hired Jennifer Rubin deserves total obliteration. That paper could not disappear fast enough for me.

  • Sheldon on September 29, 2012 10:51 PM:

    Let me add to the chorus: Any paper that hired Jennifer Rubin deserves total obliteration. That paper could not disappear fast enough for me.

  • TCinLA on September 29, 2012 11:09 PM:

    With any luck, it will take the Washington Pes down with it. Had todays Washington Pest ed board been in power in 1972, Nixon would be President for Eternity.

  • tomeck on September 30, 2012 12:34 AM:

    To paraphrase the great Mike Royko, no self respecting dead fish would want to find himself wrapped in the Washington Post

  • smartalek on September 30, 2012 1:42 AM:

    "it's a revenue stream that cheats many instructors and students."
    "questionable for profit enterprises like Kaplan"
    "Kaplan isn't its only example of scummy enterprise"
    "a malign operation like Kaplan"

    It was not always thus.
    What's truly sad -- and literally "tragic," as in "Greek __," complete with Fatal Flaw (rapacious greed, obvsly) -- is that, when the Kaplan family owned and ran the mother-corporation, and several of the licensee Centers, they were actually pretty good, and in at least some cases, quite good.
    I taught there for over 5 years, and can attest that the Boston-region operation (o/o by Stanley H's own daughters) was a great place to work, and a fine place to entrust w/ your kids', or your own, test-coaching needs.
    They were, like any successful commercial enterprise, bottom-line conscious. But they were honorable & intelligent in their pursuit of profit; they earned their pay with generally good, often excellent, results for their students.
    (Before my Junior year in college, I was earning over $ 30 / hr -- and that was in the 80s. They assigned the best & highest-paid teachers the greatest number of classes, recognizing that we'd return that investment with higher rates of referrals.)
    Then it all went to hell, when the WaPo beancounters started taking the reins.

    "The Kaplan empires' decline is well deserved."
    "Mismanagement by Post people who didn't know what the hell they were doing?"

    In my opinion (gotta say that, lest it be actionable), truer words never spoken.
    Scheduling the on-campus LSAT course at Brandeis on Saturday mornings was one of the least of their (in my opinion) idiocies.
    Hiring as LSAT "instructors" -- "experts" was a term in many of their ads -- who had never actually taken an LSAT was a slightly greater foolishness. But when one of those, on taking her very first real LSAT as a practice-test, earned a whopping 151 (on the scale of 120-180 -- and at the time, as now, 151 was about the national average score) -- while they were assuring their students & prospective students that all of these "experts" had attained top-5% scores (167+, at that time, IIRC), that one, for me, crossed the line into (in my opinion) outright evil.
    Funny thing is, for many years they not only got away with this, they prospered as never before. They raised prices and cut costs outrageously -- except, of course, for marketing, which they more than quadrupled -- and were rewarded with increased market share, even as quality and results dropped (and this one is not just my opinion; there are real numbers out there). Such is the power of branding -- and of riding a reputation that had nothing to do with the current reality.
    As delightful as it is to see this long-delayed karmic payoff, it's still terribly sad for me to think of the loss of what had been -- and of what could have been, in different hands.

  • bluestatedon on September 30, 2012 2:01 AM:

    Krauthammer. Hiatt. Rubin.

    Somehow I'm having a hard time working up the tears for the WaPo.

  • low-tech cyclist on September 30, 2012 8:44 AM:

    The paper clearly has failed to cultivate the kind of mid-to upper level civil officials that have always been good sources of leaks and background even as most feds truly distrust the press.

    Rich - I'd say even that failure is about a 0.1 on the Richter scale. Right now, we're in something of a golden age in terms of publicly available information about what's going on in our government, our country, and the world. All that a good national newspaper needs is reporters who are smart enough to understand the information in their subject areas, and who are good enough writers to cogently report about it.

    Instead, we have a reportorial corps who gets suckered in by the likes of Paul Ryan partly because they're either too dumb or too lazy to make sense of a budget themselves, let alone make sense of even the basics of the stimulus v. austerity debate that the public really needs to have explained to them.

    They're failing because they're really not very good at their jobs, not because they've failed to cultivate the right sorts of contacts.

  • 14All on September 30, 2012 8:51 AM:

    Forgive me if I'm missing something here, but if Kaplan "looked very different than it does today" when the Post bought it, then whose fault is it that it's a "shady institution" now?

    Seems to me the Post is getting its rightful comeuppance for corrupting Kaplan. Presumably it was just a money-making machine to them, and they cared naught for students or education.

    And the poetry of watching what is essentially a neocon institution collapse upon itself when the federal funding propping it up is taken away is quite satisfying, as well.

  • grooft on September 30, 2012 10:02 AM:

    The reason for the shutdown is that "three campuses (in Baltimore, Indianapolis and Dayton, Ohio) ...could lose accreditation “for failure to meet certain student achievement threshold requirements” and had asked for the school to respond by September.

    -- So they avoid getting anything written down on why they are failing, and they eliminate the risk that the failed campus scores can be used against them in the Federal oversight -- since the very lax Federal regulations require failure to meet guidelines in three measures for three consecutive years. Curing one of the issues measured for one year resets the clock. --

    A loss of accreditation would mean the Kaplan campuses would no longer be eligible for Title IV loans from the Education Department, ***the source of nearly 90 percent of Kaplan higher-education revenue***.

    This piece appeared in the business news digest in the fishwrap version of the Post. Middle of the small section. The following page had a story "Defaults on student loans are on the rise" by Nick Anderson.

    3 years of over 30% default rate is the trigger.

  • LWC on September 30, 2012 10:23 AM:

    Who the hell is Simon Von Zuylen-Wood? How did he get this weekend writing gig? I have to say, I won't bother reading anything else he's written here. I have pretty much given up on the blog since Steve Benen left. Now I just read him at the Maddow Blog. I'd say having Mr. Von ZW sitting in here puts the nail in the coffin. Too bad.

  • grooft on September 30, 2012 10:23 AM:

    It's worse than I thought on the WaPo reporting...

    The original article that came to my doorstep was enhanced in the online version. What was left out of the original reporting on Student Defaults is listed below.

    "But he said the government should also improve loan collection programs and give schools authority to limit loans to the direct cost of education. “We all must do more,” Gunderson said.

    The Washington Post Co. provides higher education for profit through its Kaplan education unit. The three-year default rate for Kaplan University, the largest Kaplan school, was 25.9 percent. At a few Kaplan schools the rate topped 30 percent. For example, at Kaplan Career Institute in Boston, it was 33.6 percent.

    Kaplan spokesman Mark Harrad said the default rate held steady or improved at most Kaplan schools. “Obviously we will work with any school that needs improvement,” he said.

    Federal officials said 218 schools nationwide had default rates higher than 30 percent."

  • Eli Rabett on September 30, 2012 11:31 PM:

    Fairly obviously when the Republicans won the House in 1994, and Rev. Moon started the Washington Times, the Post decided to defend its territory on the basis of no enemies to the right. They (and the NYTimes and PbS similarly but not as much) tried to preempt competition from the right. In doing so they angered their natural constituencies. The game lasted about 15 years, but now they are paying the price of their relentless hippie bashing. Don't ask Eli for any help.