Sen. Thomas Carper, D-Del., said he has serious concerns about oversight of the Defense Department's tuition aid program and its ability to guard itself against abuse from schools, particularly for-profit colleges and universities that have received large increases in federal aid in recent years.
Between 2009 and 2010, revenue from military educational benefits at for-profit colleges such as the Washington Post's Kaplan University grew 211 percent.
"Unfortunately, recent reports indicate that some bad actors have taken advantage of our military personnel and have failed to deliver the quality of education they promise our men and women in uniform," Carper said.
Bloomberg Businessweek reported in November that Kaplan had been invoking the name of the Washington Post and its board members, such as Melinda Gates and Warren Buffett, to boost its recruitment of veterans. Both Gates and Buffett have since resigned from the board.
The practice exploits a loophole that would limit how much federal student aid Kaplan could receive per student. Tuition paid to for-profit colleges counts as nongovernment revenue under the GI Bill.
The March 2 hearing, to be held by Carper's Homeland Security
subcommittee on federal financial management, will help identify the abuses, especially in school recruiting practices, he said.
Kaplan enrolls 110,000 students, with about 70,000 attending class online, and has 75 campuses nationwide. But its financial performance is slipping, causing the Washington Post to report a 3 percent drop in its fourth-quarter net income. Earnings declined 18 percent at Kaplan, which accounts for more than half of the Post Co.'s total revenue. Enrollment growth for education programs slowed and the company said potential rulemaking by the Department of Education could have a "adverse effect" on Kaplan's future operating results, the company said.
The school derived 87 percent of its revenue from federal student aid in 2009. According to Department of Education data released in 2009, only 28 percent of Kaplan students repay their student loans, and just 33 percent of four-year students graduate from the university.
Kaplan also faces an investigation by the Florida attorney general into recruiting practices at for-profit colleges. Kaplan suspended enrollment at two of its campuses after a Government Accountability Office investigation found that recruiters were exaggerating how much applicants could earn from a Kaplan education.
Shares of the Post fell $25.83, or 5.9 percent, to close at $414.55 on the New York Stock Exchange.
