Tougher student loan rules could hurt Washington Post Co.




A proposed federal government crackdown on student loan repayment rules could hurt the Washington Post Co.’s Kaplan testing and education unit,


Bloomberg BusinessWeek

reported.

New regulations being considered by Congress and the Obama administration could make students at schools with the worst loan repayment records ineligible for federal loans. Department of Education data show that less than 35% of federal student loan aid is repaid at for-profit campuses operated by Kaplan and two other large companies, the article said.

In addition to its college admissions test preparation courses, Kaplan offers degree programs online and at campuses in four states, the report noted.

Although the

Washington Post

newspaper and its

Newsweek

magazine [which the Post agreed to sell in August 2010] are better known, Kaplan has become the Post’s largest unit, accounting for nearly 60 percent of revenue last year, up from 11 percent 10 years ago. Kaplan’s impact on profits [is] even greater. In 2009, Kaplan had operating income of $194.8 million, while the Post’s newspaper business lost $163.5 million and Newsweek lost $29.2 million.

Post chairman Donald Graham has personally lobbied on Kaplan’s behalf and contends that the regulations would punish schools that serve low-income students,

Bloomberg BusinessWeek

reported.

The warnings about Kaplan have shaken investors in Washington Post stock … sending the shares at one point to a 14-year low. The stock has tumbled more than 18 percent this year.

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The article also noted that the company may also face higher borrowing costs. (Source:

Bloomberg BusinessWeek,

Sept. 2, 2010.)

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