Sunday, April 10, 2011

Why the Washington Post Should Really Be Called Kaplan (And Why That's Not Good)

The Washington Post owns the education company, Kaplan. Kaplan has seven times the number of employees as does WaPo's traditional news business. Most of WaPo's earnings have been coming from Kaplan. That will stop real soon.

Warren Buffett recently resigned from the Board of Directors of WaPo, some suspect it wasn't because of his age, but because of the problems at Kaplan. Short-sellers are circling the industry that WaPo is in, and have started to short WaPO stock. They think it is the next government boondoggle, similar in many ways to the real estate subprime fiasco. Over 90% of those who sign up for the type of "education" offered by Kaplan receive government loans. They tend to be low-income earners.  The default rate on the loansis 30%, the graduation rate is not impressive. There are investigations.

WaPo reports on its bigger brother here.

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