April 26, 2022

Debt Relief for Defrauded Students Is Long Overdue – And So Is Accountability for Kaplan

Debt Relief for Defrauded Students Is Long Overdue - And So Is Accountability for Kaplan

Lawyers representing former students of Kaplan Career Institute in Massachusetts have sued the U.S. Department of Education, alleging an unlawful and unconscionable failure of the Department to cancel the students’ federal loans — seven years after the Massachusetts attorney general settled with the school over charges that it deceived and defrauded students. The year after the Massachusetts AG office reached its $1.375 million settlement with Kaplan Career Institute, the state applied to the Department for a “group discharge” on behalf of the students, alleging they were harmed by systematic deception and deserved to have their loan debt cancelled without individualized showings by every last attendee. 

The Department should act promptly to cancel the loans in response to the lawsuit, which was filed by three non-profit law firms: Student Defense, Project on Predatory Student Lending, and National Consumer Law Center. The former students wasted enough of their time and own money pursuing Kaplan degrees that for many did not yield any career advancement. 

But there’s more the Department should do. The operator of Kaplan Career Institute, the company that the Massachusetts AG concluded was defrauding students — and whose loan discharges would cost taxpayers millions — is not some strip mall scam operation. It’s a big corporation, traded on Wall Street, called Graham Holdings, whose chairman is Donald Graham, a powerful Washingtonian from a legendary Washington family. Legendary because the company was formerly called The Washington Post Company before it sold its flagship newspaper to Jeff Bezos. Unfortunately, under Donald Graham, the company moved its focus from journalism to educational testing and then to running predatory colleges that took billions in taxpayer money for student aid and ruined the financial futures of many of the people they promised to help. 

The troubled Kaplan Career Institute, Kaplan College, and Kaplan University brands — tarred by multiple law enforcement, congressional, and media investigations exposing deceptive and predatory practices — have now disappeared. (In 2015, Graham Holdings sold Kaplan Career Institute and Kaplan College to another predatory chain, Education Corp. of America, which renamed the schools “Brightwood” but then shuttered the campuses and its whole operation in 2018.) But that doesn’t mean that Kaplan Higher Education and Graham Holdings have left the higher ed business. Instead, taking advantage of the lax regulatory environment under Donald Trump and Betsy DeVos, Graham Holdings engineered a troubling deal with former Indiana governor and current Purdue University president Mitch Daniels to dress up Kaplan University with a new name — Purdue University Global — and the respectable gloss and protections of a state university, while allowing the company to hold a lucrative 30-year contract to keep running the school. 

So taxpayers continue to send tens of millions annually to a school run by the same predatory Graham Holdings / Kaplan operation, and people seeking to improve their financial futures through education — veterans, single moms, recent immigrants, and others — keep enrolling, when they could be getting much better, and more affordable, educations elsewhere.

So even if the Department of Education does the right thing here in response to the new lawsuit and grants debt relief to people defrauded by Kaplan, it needs to stop compounding its error of sending money to Kaplan through Purdue Global. It should closely scrutinize the company and the school and recognize that they have forfeited the privilege of participating in the federal student aid program. 

Debt Relief for Defrauded Students Is Long Overdue - And So Is Accountability for Kaplan