Washington Post 2015 Annual Report Download - page 25

were included in the scope of this industry-wide review. In July 2012, the majority staff of the Committee issued
a final report to conclude the review that included observations and recommendations for federal policy, but did
not include or endorse any specific proposed legislation or regulations.
Other committees of Congress have also held hearings addressing, among other things, the standards and
procedures of accrediting agencies, credit hours and program length and the portion of U.S. Federal student
financial aid going to for-profit institutions, and enrollment of active-duty military personnel and veterans. In
addition, concerns generated by congressional or other activity or media reports may adversely affect enrollment
in for-profit educational institutions.
Kaplan cannot predict the extent to which these activities could result in further investigations, legislation or
rulemaking affecting its participation in Title IV programs, other governmental actions and/or actions by state
agencies or legislators or by accreditors. If any laws or regulations are adopted that significantly limit Kaplan’s
participation in Title IV programs or the amount of student financial aid for which Kaplan’s students are eligible,
Kaplan’s results of operations and cash flows would be adversely and materially impacted.
Program Reviews, Audits and Investigations. Kaplan’s schools are subject to audits or program compliance
reviews by various external agencies, including the ED, its Office of the Inspector General, other federal agencies
including the Department of Defense and the Department of Veterans Affairs, and state accrediting agencies.
While program reviews may be undertaken for a variety of reasons, they are performed routinely as part of
regulatory oversight of institutions that participate in Title IV or federal or state student funding programs. If the
ED or another regulatory agency determines that an institution has improperly disbursed Title IV or other federal
or state program funds or violated a provision of the Higher Education Act or other federal or state law or
regulations, the affected institution may be required to repay funds to the ED or the appropriate federal or 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 ED or other agencies or upon judicial review.
On February 23, 2015, the ED began a review of Kaplan University. The review will assess Kaplan’s
administration of its Title IV and Higher Education Act programs and will initially focus on the 2013 to 2014 and
2014 to 2015 award years. On December 17, 2015, Kaplan University received a notice from the ED that it had
been placed on provisional certification status until September 30, 2018, in connection with the open and
ongoing ED program review. The ED has not notified Kaplan University of any negative findings. However, at
this time, Kaplan cannot predict the outcome of this review, when it will be completed or any liability or other
limitations that the ED may place on Kaplan University as a result of this review. During the period of
provisional certification, Kaplan University must obtain prior ED approval to open a new location, add an
educational program, acquire another school or make any other significant change.
In addition, there are four open program reviews at campuses that were part of the KHE Campuses business,
including the ED’s final reports on the program reviews at KHE’s Broomall, PA, and Pittsburgh, PA, locations.
Kaplan retains responsibility for any financial obligation resulting from the ED program reviews at the KHE
Campuses business that were open at the time of sale of the campuses to ECA.
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 ED
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 ED. Kaplan’s schools are subject to reviews by the accrediting agencies that accredit them and
their educational programs. Kaplan University’s regional accreditation by the HLC is required to be reaffirmed in
2016. As part of this process, in the second quarter of 2016, the HLC will conduct reaffirmation site visits at
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