Melinda Gates Leaves Post Board After Report Criticizes Kaplan

Melinda Gates' resignation from the Washington Post board comes shortly after the release of a highly critical report, funded partly by the Bill & Melinda Gates Foundation, that likens for-profit colleges to subprime-mortgage lenders, targeting low-income and traditionally underrepresented students.

Melinda French Gates, philanthropist and wife of Microsoft Corp. Chairman Bill Gates, has resigned from The Washington Post Co.'s board of directors.


Her resignation comes shortly after the release of a highly critical report, funded partly by her foundation, which likened for-profit colleges to subprime-mortgage lenders, targeting low-income and traditionally underrepresented students. The Washington Post Co. gets more than half of its revenues from its for-profit higher-education unit, Kaplan.

Neither Gates nor The Washington Post gave a reason for her departure.

Gates, who runs the multibillion-dollar Bill & Melinda Gates Foundation with her husband, joined The Washington Post Co.'s board in 2004.

The report, "Subprime Opportunity,"  authored by the Washington, D.C.–based Education Trust, said low-income students make up half of the enrollment at for-profit colleges and Blacks, Latinos and American Indians comprise 37 percent. The Education Trust is a nonprofit research and advocacy group, and the report was funded partly by the Bill & Melinda Gates Foundation and the Lumina Foundation for Education.

The report also found that in 2008, only 22 percent of the first-time, full-time bachelor-degree students at for-profit colleges graduate within six years, compared with 55 percent at public institutions and 65 percent at private nonprofit colleges.

The student-debt loads for recipients of bachelor's degrees at for-profit colleges is also significantly higher than traditional universities: $31,190, compared with $7,960 at public institutions and $17,040 at private nonprofit colleges, the Education Trust report said.

The Post acquired Kaplan in 1984 when it was still primarily a test-prep company, preparing millions of students for standardized exams such as the SAT, LSAT, MCATs and other tests.

Over the last decade, Kaplan has moved aggressively into for-profit higher education, acquiring 75 small colleges and starting the huge online Kaplan University, according to published reports.

Today, Kaplan higher-education revenues "eclipse not only the test-prep operations, but all the rest of the Washington Post Company's operations," according to The New York Times.

According to The Washington Post Co.'s annual report, filed on March 2, 2010: "Kaplan Higher Education generated $1.54 billion in revenue in 2009, 58 percent of The Washington Post Company's total revenue. The $1.54-billion revenue for Kaplan Higher Education was an increase of $606 million (65 percent) from 2007."

The Kaplan education unit has come under harsh scrutiny in recent news reports, and former Kaplan employees allege they are instructed to invoke the name of its parent company, The Washington Post, as well as the names of board members such as Gates, to persuade students to take classes at the company.

In a press release announcing her departure, Gates said that she was "impressed with The Washington Post Co.'s work with Kaplan, whose new approaches to education are allowing students opportunities that would otherwise not be possible."

She also said that the mission of The Washington Post Co. "remains as vital today as at any time in its history."

The Washington Post Co. board now has 11 members, including Warren Buffett, whose Berkshire Hathaway company owns about 24 percent of the firm. Buffett has pledged to donate much of his fortune to the Gates Foundation. According to the Bill & Melinda Gates Foundation website, the foundation has assets of $36.4 billion, more than 870 employees and links to more than 100 countries.

President Barack Obama has proposed regulations that would restrict the flow of taxpayer money to for-profit colleges, which get up to 90 percent of their revenue from federal grants and loans and received $26.5 billion last year in U.S. student aid.

According to a Bloomberg report, "for-profit colleges in the 2008–2009 academic year received $4.3 billion in federal Pell grants, which help low-income students pay for college, quadruple the amount they received 10 years earlier."

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