The Washington Post Co.’s Kaplan division is “reeling from a storm of criticism of the industry’s practices” and faces a sharp drop in enrollment and new regulations affecting federal student loans,
the
Washington Post
reported.
The article noted that the Post Co. entered the for-profit education market 11 years ago when it bought Quest Education, an Atlanta-based chain of vocational schools catering to low-income students, for $165 million. Kaplan became a multibillion-dollar enterprise as the newspaper industry’s fortunes declined and the company sold
Newsweek
magazine. The
Post
noted:
The Post Co. now calls itself an education and media company — no longer the other way around. But what proved a deftly timed business move brought other, less welcome scrutiny to a family-run company that had long prided itself in serving the public interest.
The article said the company “did not keep close-enough tabs on its fast-sprawling education unit, even as it focused heavily on customers who were poorer and thus at the riskier end of the business.” Citing a former director who was not named, the report said board members “were better versed in media than education but that the lure of big profits was hard to resist.”
The report noted that Post Co. CEO Donald Graham “tended to delegate authority to trusted managers.”
Graham, who inherited control of the company from his mother and grandfather, had risen through the newspaper side of the business. Kaplan was a different animal: bigger and dispersed. By 2006, it had three times as many full-time employees as the newspaper did; today it has seven times as many.
In December, the Post Co.’s higher-education division laid off 5% of its workforce, and it is shifting its focus away from poor students, the article said. In the fourth quarter, enrollments dropped by 47%.
“The fate of The Post Co. has become inextricably linked with that of Kaplan….,” the article said. (Source:
Washington Post,
April 9, 2011.)
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