Michael Santoli and Bill Alpert at Barrons reveal that the U.S. Department of Education is reviewing the operations of Kaplan Inc., the for-profit education institution owned by the Washington Post Company. The reason for DOE’s concern appears to be the default rate for students who take out loans to attend Kaplan University, a subsidiary of the Kaplan company. According to the article:
Kaplan higher-ed’s numbers have been getting worse. In the first two years after graduation, defaults at four of the school’s 33 reporting units were above 25%, which is the level at which they are at risk of Department of Education sanctions. At the online Kaplan University, defaults rose from 6% for 2005 grads to 13% for 2007 grads, with preliminary numbers for 2008 worse, around 16%.
And student loans are very, very important at Kaplan. Some 87.5 percent of Kaplan University‘s revenue comes from federal financial aid.
According to the Barrons article, the for-profit education business made up 58 percent of the Washington Post Company’s 2009 revenue.