Don Graham: For-profit school plan hurts poor kids
Don Graham, Chairman and CEO of the Washington Post Company, visited the Reuters studio this morning to chat with Chrystia about the future of the company’s Kaplan subsidiary as well as its flagship newspaper. In addition to its popular test preparation courses, Kaplan operates 75 colleges and graduate schools, both online and through brick-and-mortar campuses, that serve 112,000 students. Earlier this year the Department of Education lashed out at for-profit colleges like Kaplan for misleading prospective students about tuition costs and salaries after graduation. The Department proposed new regulations on these institutions that would tie federal aid to the number of students who are repaying their loans.
Graham said that while the Department’s efforts to crack down on bad actors are right-minded, the current proposals will end up having an unintentional yet harmful effect on low-income students:
There is a 99% correlation between the number of Pell Grant students—the number of poor students a campus serves—and the repayment rate under the proposed Department rules… The Department has scored a direct hit on schools that serve poor students. They didn’t want to. They didn’t mean to. But that is what they did. And I hope they’ll reconsider that rule and propose something that in fact cracks down on bad actors but does not punish schools that serve poor students.
Graham offered an alternative proposal, the “Kaplan Commitment,” that would preserve the Department’s intentions to ensure students are not misled but that would not discriminate against poor students. The Kaplan Commitment will allow any student to enroll in any campus or online course that Kaplan operates for five weeks, free-of-charge. If the student decides the program is not for them, they can withdraw without paying a dime in tuition. Graham did note that enacting this change would have a material adverse impact on the company’s earnings, but he said it was worth it to show everyone that at Kaplan students come first.
When asked whether the entire model of for-profit education is a mistake, Graham said that at a time when state universities are seeing their budgets’ slashed, only for-profit colleges like Kaplan are poised to meet students’ needs:
Somewhere between 7 and 10% of all students today are signed up at for-profit institutions… Let’s talk about traditional education and for-profit education. There are of course the most famous elite private universities in the United States—the Ivy League and so on—but nobody is founding such institutions in great numbers or expanding them widely today. President Obama has announced what seems like a pretty sensible goal: that the United States should again be #1 in the world in the percentage of adults who have graduated from college. And this is not a minor goal of his; this is put forward as one of the principal goals of his administration. The bulk of Americans who go to university go to a State U—go to a community college or go to one of the great state universities. The state universities are a fantastic achievement of the United States of America, but given the financial conditions of the states, and especially of the largest states, it is as plain as day that these state universities are struggling to maintain the number of students they have today. A year ago Cal State said they were reducing their total student count by 44,000 students. That’s a lot of students. And the state of California, the financial condition of the state of California is pretty famous. It’s very, very bad. Illinois, New Jersey, New York—these are states with big financial challenges. So are they going to be able to offer places to more students? It doesn’t seem realistic that they are.
Finally, Chrystia asked Graham how the Washington Post intends to compete with relative newcomers like Politico and Bloomberg News that have grown significantly in the nation’s capital in just a short time. Here’s what he had to say:
I really admire what the Allbritton Company has done with Politico. It’s a very good job. As far as the economic future of the Post is concerned, every newspaper in the United States is under the same kinds of challenges. Down in Baltimore or up in Philadelphia they’re not thinking about Politico but they’ve got the same kinds of challenges to their political future, so it’s a challenge for our journalists to compete with the very good journalists they have as we compete with the journalists at the New York Times and the Wall Street Journal and Reuters. That is one of many journalistic challenges. It isn’t really fundamentally an economic challenge… Bloomberg—as I understand it—Bloomberg is going to hire a lot of reporters and offer a lot of specialized products to readers who have strong interests in tax or energy policy. That highly specialized information industry is an important part of the Washington news industry but it’s mostly covered by newsletter providers… I think Bloomberg News is a great organization—I’m sure they’ll do a good job, but what they’re meeting is the demand from their financial customers for highly specialized information about the actions of particular federal government agencies, which isn’t the primary focus of most newspaper readers.
Graham added he “welcome[d] the competition” and that he is “thrilled with the way the Post newsroom is doing its job today,” especially with coverage of the midterm elections. He also does not foresee a day in his lifetime when the Washington Post does not have a print edition, noting “there’s a strong preference among readers for a print publication.”
Posted by Peter Rudegeair.