Kaplan responds to Education Department
In a letter to Education Secretary Arne Duncan, released late Friday, Kaplan CEO Andrew S. Rosen proposed what amounts to a money-back guarantee for customers in its for-profit Kaplan Higher Education division.
The letter, dated Sept. 8, was in response to the Education Department's proposal to regulate for-profit college programs that officials say don't consistently yield "gainful employment" for their graduates. Rosen suggested that by making the introductory portions of its for-profit higher education program "risk-free," and the tuition refundable, the company could address any concerns over how students are recruited into the program or whether they get what they pay for.
Mark Harrad, a Kaplan spokesman, said there's no guarantee Kaplan would be permitted to make a risk-free guarantee to its students. The Education Department and state regulators would have to approve, as well as Kaplan's accreditors.
"It's a great idea and one we're going to push for, but it's not an operational reality yet," he said.
Kaplan, which is owned by the Washington Post Co., and other players in the for-profit sector have initiated a number of housecleaning moves and proposed others in response to mounting regulatory pressure.
An August GAO report found evidence of deceptive recruiting tactics across a wide range of for-profit colleges, including two operated by Kaplan. The report found deceptive marketing practices at each of 15 campuses visited, and four encouraged applicants to commit fraud.
The Obama administration earlier this year proposed 14 new rules to curb abuses in the for-profit sector.
Right now, all the attention is focused on one: a plan that would require vocational programs to prove they yield "gainful employment" for their graduates, as measured by the ability of graduates to repay their student loans.
A flood of comments poured in this week, from for-profit entities and various allies and critics, either supporting or opposing the gainful employment rule. Under a proposed formula, academic programs would have to demonstrate that a sufficient share of graduates are repaying their loans, and that graduates earn enough to make their monthly payments, or risk losing federal funding.
The Kaplan letter was released along with the company's official comments on the gainful employment rule.
Kaplan and other for-profit entities contend the rule discriminates against low-income students, who tend to borrow more money and have a harder time repaying their debts. Supporters of the plan say the for-profit programs have no business operating if they cannot prove their graduates are gainfully employed.
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Daniel de Vise
| September 10, 2010; 6:09 PM ET
Categories: For-profit colleges | Tags: Kaplan Washington Post, for-profit colleges, for-profit higher education
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