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3
2010 ANNUAL REPORT
fewer poor students. We’ll be seeking to enroll
students with somewhat greater means (we’re
budgeting for our average student’s expected
family contribution to double). As a business
decision, this makes complete sense. As federal
policy, it seems odd.
As I write, the final form of the “gainful employ-
ment” regulation isn’t yet decided. But busi-
nesses have to draw up their plans, and the
plan described above is at the heart of ours.
What Does Kaplan Higher Education Do?
Until 2010, Kaplan’s Higher Education unit—our
largest and most profitable—was in the busi-
ness of providing higher education of various
types for some of the poorest and neediest stu-
dents in America.
This was not because Kaplan does not know
how to provide education for wealthier stu-
dents. Kaplan, Inc. got its start providing col-
lege and graduate school test preparation
for students, most relatively well-o (well-o
enough, at least, that their families could aord
the test prep course).
When we entered the higher education busi-
ness by buying Quest Education in 2000, we
welcomed the chance to focus on a dierent
group of students altogether.
Quest had been founded by Gary Kerber, a
salesman of medical devices who was smart
enough to notice that whenever he entered a
doctor’s oce or hospital, there was likely to
be a help-wanted sign.
Gary built a company focused on training very
low-income students for medical assistant, dental
assistant and introductory business jobs. After we
bought his company, we expanded the business
and continued to serve low-income students.
Gary’s company was also one of a small number of
participants in a Department of Education dem-
onstration project on online higher education. It
was timely for us; we had failed in a couple of
online higher education start-ups and knew we
had to succeed in the future.
So Jonathan Grayer, then Kaplan’s CEO, assigned
Andy Rosen, then Kaplan’s president, to take
over Kaplan’s online higher education eorts.
Since 2001, all of Kaplan’s online programs, and
since 2005, all of its higher education programs
PELL RECIPIENTS
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
>60%50%–60%40%–50%30%–40%<30%
Kaplan (28%)
Public Non-Profit Repayment Rate
Linear (Public Non-Profit Repayment Rate)
% Pell Recipients
Repayment Rate
Source: U.S. Department of Education, ge-data-model.xls, 2009, institutions
grouped in deciles.
Kaplan Data Source: Kaplan internal data for comparable students, 2003–04.
R2=0.9913
This is a chart we showed in a discussion with Department of Educa tion
ocials; one Depart ment ocial told us they preferred a dierent meth-
odology that results in a lower correlation. Independent research has been
published that supports the higher correlation. A further explanation is
on the Company’s website, washpostco.com, under “Annual Reports.”