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Post needs to beef up its coverage of allegations against Kaplan

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By Andrew Alexander
Friday, November 19, 2010; 8:49 PM

Readers always cast a critical eye on Post news coverage, but scrutiny is elevated when that coverage affects The Post itself.

In recent weeks, some have questioned whether The Post is being aggressive enough in reporting on troubles confronting Kaplan, the fast-growing education subsidiary of the parent Washington Post Co. It provides well over half the revenue for the entire corporation.

Kaplan and other for-profit education companies are in the crosshairs of Congress and the Obama administration over concerns about aggressive student recruiting and low graduation rates.

The Post has covered much of this, including a Government Accountability Office investigation alleging that recruiters for Kaplan and some other for-profits encouraged fraud or used deceptive marketing practices. And a month ago, The Post's Nick Anderson wrote a solid piece detailing the "full-tilt, high-dollar" campaign by Kaplan and other for-profits to block or limit proposed regulations that could sharply reduce federal financing for their programs. The story quoted Donald E. Graham, The Post Co.'s chairman and chief executive, who has been lobbying lawmakers and the administration. The Post also has editorialized against the regulations. Whether in stories or editorials about Kaplan, The Post has properly noted its self-interest.

Disclosure is one thing, but depth of news coverage is another.

In recent weeks, lengthy stories by competitors have reported damning allegations against Kaplan. A Nov. 10 investigative story on the front page of the New York Times included accusations of deceptive practices by Kaplan from federal whistleblower lawsuits and current and former company employees. It also noted that Kaplan is among more than a half dozen for-profit colleges under investigation by the Florida attorney general.

Separately, Bloomberg News recently carried an unflattering story about Kaplan's practices in trying to enroll military veterans. The Post has a news partnership with Bloomberg, but the story was not featured on The Post's Web site or in the newspaper.

Kaplan officials vigorously dispute most of the allegations and forcefully assert that the proposed federal regulations would unfairly impact for-profit schools serving low-income students, many of them single parents.

Whatever the truth of the allegations, the proposed regulations and bad publicity have damaged Kaplan, whose revenue in recent years has helped the parent company offset losses at The Post newspaper. It could get worse. In its third-quarter earnings report earlier this month. The Washington Post Co. said new federal regulations could have a "material adverse effect on Kaplan's operating results."

The impact could be "monumental," said Craig A. Huber, an analyst who closely follows The Post Co. for Access 342, an independent stock research firm.

Bradley Safalow, who evaluates education stocks for PAA Research, another independent firm, believes Kaplan's problems are deep and real.

"If you read these whistleblower lawsuits, they really paint a picture of an organization that lacked a significant amount of oversight and regulatory compliance standards," he said.


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