Washington Post Co. Shares Drop Sharply on Warning About Kaplan Unit

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By: Mark Fitzgerald

Shares of The Washington Post Co. hit a new 52-week low  Monday as the company that calls itself a “a diversified education and media company” said that proposed rules on federal aid to students at for-profit schools could have a significant impact on some of the schools operated by its biggest cash cow, the Kaplan education unit.

Under the new rules proposed last week by the U.S. Department of Education, students would not be able to take out Title IV loans for a school program if a certain percentage of graduates are not repaying the principal on their loans, or have a debt load of more than 20% of discretionary income or 8% of total income.

That’s bad news for the Post Co., which said in a Securities and Exchange Commission filing that programs in its Kaplan Higher Education division have repayment rates ranging from 13% to 51%, and the weighted average repayment rates of all its institutions is about 28%. The government proposes to make schools ineligible for Title IV  if its graduate repayment rate is less than 35%. Washington is proposing to consider school by school rather than an overall company rate, the Post Co. noted.

Kaplan accounts for about two-thirds of the Post Co.’s revenue and operating income at a time when The Washington Post and the rest of its print properties continue to struggle. The higher education division alone accounted for 18% of revenue in 2009, the company said.

Monday, with about an hour of trading to go, WPO was at $319.38 a share, off $24.42 or 7.1% from the open. Earlier in the day, investors pushed WPO down 13% to a new 52-week low of $295.56, or 46% below the high of $547.58 it established on April 21.

This story has been changed from an earlier version which gave an incorrect figure for WPO’s share price decline in the 52-week period.

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