Washington Post 2012 Annual Report Download - page 21

oversight of institutions that participate in Title IV or state student funding programs. If the DOE or another regulatory
agency determines that an institution has improperly disbursed Title IV or state program funds or violated a provision of the
Higher Education Act or state law or regulations, the affected institution may be required to repay such funds to the DOE
or the appropriate state agency or lender and may be assessed an administrative fine and be subject to other sanctions.
Although Kaplan endeavors to comply with all U.S. Federal and state laws and regulations, Kaplan cannot guarantee that
its interpretation of the relevant rules will be upheld by the DOE or other agencies, or upon judicial review.
In September 2008, the DOE began a program review at KHE’s CHI-Broomall, PA, campus. The DOE has delayed
issuing a final report on this review, pending the completion of a separate inquiry regarding the program from the U.S.
Attorney’s Office for the Eastern District of Pennsylvania. In July 2011, Kaplan resolved the inquiry with the U.S. Attorney’s
office and expects to receive a final report on this review soon. No assurance can be given that the DOE’s final report
will not have a significant adverse effect on Kaplan’s ability to continue to operate this school. See further discussion in
Item 3. Legal Proceedings.
The DOE also began a program review in October 2007 at KHE’s Pittsburgh, PA, location. Kaplan has responded to all
requests for information and is cooperating fully in this review. The DOE has not yet issued a final report on this review.
No assurance can be given that the DOE’s final report will not have a significant adverse effect on Kaplan’s ability to
continue to operate this school.
In September 2009, the DOE began a program review of Kaplan University at its offices in Fort Lauderdale, FL. In May
2012, the DOE issued a preliminary report containing several findings that require Kaplan University to conduct
additional, dated file reviews and submit additional data. In January 2013, Kaplan submitted a response to the DOE’s
data request and is awaiting a final report on this review. No assurance can be given that the DOE’s final report will not
have a significant adverse effect on Kaplan’s ability to continue to operate this school. In addition, in August 2012, the
DOE notified Kaplan University that it was conducting an offsite program review focused solely on Title IV verification
processes, and the DOE began this review in September 2012. In November 2012, the DOE issued a Program Review
Report containing one finding and requesting that Kaplan University update its verification policy and report on certain
students whose verifications were not properly coded. In January 2013, Kaplan submitted a response to the DOE
confirming that it had taken the actions requested in the DOE’s November report. The DOE issued a final report in
February 2013 indicating that no further action is required for the offsite program review.
In May 2012, the DOE conducted a program review of the Nashville, TN, campus. The DOE issued a final report on
May 16, 2012, indicating no findings.
In January 2013, the DOE notified the Franklin Mills, PA, campus that it would conduct a program review. Kaplan has no
knowledge at this time of any findings of non-compliance that may or may not occur.
In February 2013, the DOE notified Kaplan’s Hesser campus in New Hampshire that it would conduct a program review
beginning March 4, 2013. Kaplan has no knowledge at this time of any findings that may or may not occur.
Institutional and Programmatic Accreditation. Accreditation is a process through which an institution submits itself to
qualitative review by an organization of peer institutions. Pursuant to the Higher Education Act, the DOE relies on
accrediting agencies to determine whether the academic quality of an institution’s educational programs is sufficient to
qualify the institution to participate in Title IV programs. As noted previously, to remain eligible to participate in Title IV
programs, a school must maintain its institutional accreditation by an accrediting agency recognized by the DOE.
In June 2012, the Accrediting Commission of Career Schools and Colleges (ACCSC), a KHE accreditor, issued a notice
to three campuses (Baltimore, Dayton and Indianapolis Northwest), to “show cause” as to why their accreditation should
not be withdrawn for failure to meet certain student achievement threshold requirements. These campuses represent
approximately 2% of KHE’s year-to-date revenue for 2012. Each of these campuses failed to meet student placement
thresholds or student graduation rate thresholds or both in some programs or aggregated over all programs. The Baltimore
and Dayton campuses responded in September 2012, providing their plans to improve these rates and demonstrate
compliance with the ACCSC standards. The Indianapolis Northwest campus responded in October 2012, indicating
that this campus will be closing and consolidating into an existing campus, also in Indianapolis. In December 2012, the
ACCSC Commission voted to continue the Baltimore and Dayton campuses on “show cause” status. ACCSC also
directed the Dayton campus to cease enrollments in the Medical Assistant program and directed the Baltimore campus to
cease enrollments in the HVAC program until the campuses can show that they meet the graduation and placement
benchmarks for those programs. KHE believes that it was able to meet these benchmarks at these campuses in their 2012
reporting to ACCSC. However, KHE cannot be certain that its remedial measures will satisfy all of ACCSC’s concerns. In
the event that ACCSC determines that some or all of these campuses may lose accreditation, a loss of accreditation
would mean that the school would no longer be eligible to participate in Title IV programs, could lose its authorization to
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