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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. Im Robert Siegel.

MICHELE NORRIS, host:

And Im Michele Norris.

Another sign of the changing times in the media: The Washington Post announced yesterday that it's putting Newsweek up for sale. Despite a new format that was introduced last year, the news weekly is losing money and its paid weekly subscriptions have dropped below two million. The flagship property of The Washington Post Company is, of course, the newspaper and it's also losing money. But the company is profitable because of a shrewd acquisition it made over 20 years ago in a growing sector of the economy - for-profit higher education.

(Soundbite of conversations)

SIEGEL: Welcome to the Hagerstown, Maryland campus of Kaplan University. This is Lori Slick's class in medical terminology, two dozen students, most are women, most are past typical college age. They are pursuing certificates or associate degrees in medical assisting or medical transcription. They're looking ahead to jobs in our ever-expanding health care sector.

Ms. LORI SLICK (Instructor): The study of hearts.

IN UNISON: Cardiology.

Ms. SLICK: Good.

SIEGEL: The students are among 950 who study at Kaplan's Hagerstown campus. Kaplan also has campuses in Iowa and Nebraska. Most of its 66,000 students dont use a campus, they study online. Lori Slick's class is an example of blended instruction: two hours in class plus online assignments in chatrooms.

Slick is a nurse and she taught previously at a nearby community college. She says she prefers the atmosphere at Kaplan and the class size.

Ms. SLICK: In a community college setting, I was in a large auditorium with PowerPoint and it was very, you know, it was very rigid. And if I could connect with the front, I couldnt connect with the back. If I connected with the back, I couldn't connect with the front. It drove me nuts. Folks fall asleep. You know, it was just hard to keep everybody engaged. The class size is nice here.

SIEGEL: And the students are often resuming an education that was interrupted years ago. In January, Sherry Funk(ph) began working toward an associates degree in medical records, coding and transcription - juggling school and family.

Ms. SHERRY FUNK (Student): In the evenings, my fianc� works nights, so - and then my daughter goes to bed early, and then thats my time and thats when I normally sit and do all of my work on the computer.

SIEGEL: And here is how Sherry Funk's tuition helps keeps one of America's most famous newspapers publishing. In 1984, Stanley Kaplan, who pioneered standardized test prep courses, sold his business to The Washington Post Company. In 2000, Kaplan Higher Education bought a company called Qwest. One of Qwest's properties was Hagerstown Business College, which then became Kaplan College and last year, part of Kaplan University.

Last year, according to The Post's annual report, Kaplan accounted for 58 percent of the company's revenue and it was profitable. Newspaper and magazine publishing accounted for only 19 percent of revenue and those activities lost money.

This year, the financial magazine Barron's figured The Post Company is worth about eight and a half billion dollars and that $5 billion of that value is from Kaplan. Kaplan is in the education business. It is a proprietary University, a for-profit university.

Christopher Motz, the president of Kaplan University, Hagerstown, prefers a different phrase.

Mr. CHRISTOPHER MOTZ (Campus President, Kaplan University): I think market-driven is probably a better term for today's world. In order to compete as the type institution we are, we have to be more sensitive to the demands of the student.

SIEGEL: You're saying the fact that you're proprietary - the fact that you're, as I would say, for-profit - is a guarantee in effect that you're tuned into the very same marketplace that a student is going to be entering in search of a job.

Mr. MOTZ: That's absolutely right.

SIEGEL: Kaplan University students pursue associates and bachelors degrees in health fields, in business, in criminal justice, there are also some masters degree programs. It's part of the growing for-profit sector of higher education, a sector that is taking aim at community colleges and many four-year institutions, promising a more flexible learning environment and better job training.

The Chronicle of Higher Education figures the for-profits account for between seven and 10 percent of all students in American higher education.

Kaplan attracts students through national advertising. For example, this television commercial in which a professor - played by an actor - apologizes to a crowded lecture hall for higher education's inflexibility.

(Soundbite of a Kaplan University ad)

Unidentified Man: The system has failed you. I have failed you. I have failed to help you share your talent with the world and the world needs talent more than ever yet, it's being wasted every day.

SIEGEL: The Kaplan commercial shows the lecture being transmitted to a laptop and being heard on an MP3 player. The amount of high-profile advertising for the for-profits, not just Kaplan but Cappella University or the University of Phoenix and others, is a point of concern for their critics.

Mr. DAVID HAWKINS (Director, Public Policy and Research, National Association for College Admission Counseling): At a for-profit college, if you look at some of the reports to the Securities and Exchange Commission, you will see that the advertising budget is immense. It is a very large part of their budget, on par and in some cases exceeding the instructional costs at the institution.

SIEGEL: David Hawkins is director of public policy and research at the National Association for College Admission Counseling. His group represents traditional colleges and universities. Another red flag in David Hawkins' view is the degree to which Kaplan and other for-profits depend on federal financial aid.

The Department of Education says a college may not get more than 90 percent of its revenue from those sources. And according to its SEC filings, Kaplan is at 87.5 percent.

Mr. HAWKINS: It is, in fact, one player in the market thats drawing quite a bit of attention because the amount of revenue that theyve received - and I believe last year it was around $1.3 billion - comes almost exclusively from the federal financial aid programs.

SIEGEL: Also, Kaplan's owner, The Washington Post, is a publicly-traded company. Will Wall Street really look kindly on any but the most profitable programs and practices?

Well, the president of the entire Kaplan University system, Wade Dyke, says the Wall Street connection is a plus.

Dr. WADE DYKE (President, Kaplan University): One of the benefits we have as a for-profit institution is we have access to capital, we can be reasonably nimble as we respond to new technologies. I think our growth in online is an example of that.

SIEGEL: President Dyke, who used to teach at Ohio State, is based in Fort Lauderdale. And thats another novel feature of the for-profit online sector: A degree of decentralization unthinkable in the pre-Internet age.

Dr. DYKE: Our main campus remains in Davenport, Iowa, which was the original campus from which the university sprung, if you will. And our operational support and the leadership for the Kaplan Higher Education operation is out of Chicago, our provost is out of Chicago. As a company, as you know, we're a division of The Washington Post, so The Post is in Washington, D.C.

SIEGEL: The Kaplan corporate offices are in New York. The students are everywhere. And the digitized library they can access is at the University of Alabama, Huntsville.

This is a very entrepreneurial take on higher education. And part of what is being bought and sold is accreditation. When Kaplan operated the Hagerstown campus as Kaplan College, it had national accreditation, which is legitimate but it's considered less than the platinum standard of regional accreditation. Last year, when it absorbed the college into Kaplan University, the Hagerstown campus acquired the Midwestern accreditation that originated with the colleges Kaplan had bought in Iowa and Nebraska years earlier.

Christopher Motz, the president of Hagerstown, says gaining that accreditation by being absorbed into the university meant both prestige and practical advantages for his campus.

Mr. MOTZ: It means something in transferability of credits. It typically will make that transfer from one institution to another, under regional accreditation, a little bit easier. And certainly it's done that. It lends some weight to the degree.

SIEGEL: And it lent weight to the title of Lori Slick, the nurse who teaches medical terminology.

Ms. SLICK: Allied health professor.

SIEGEL: Allied health professor?

Ms. SLICK: Yeah.

SIEGEL: So you became a university professor last year.

Ms. SLICK: Yeah, I did.

(Soundbite of laughter)

Ms. SLICK: How cool is that?

SIEGEL: Pretty cool.

Ms. SLICK: Yeah, pretty cool.

(Soundbite of music)

SIEGEL: Okay. Okay, we're along way from magisterial commencement ceremonies and ivy covered walls. This is very much about getting a degree that leads to a job or a promotion. Critics question whether the jobs you can get pay enough to cover all those student loans. But frankly, in today's labor market, they could say as much of just about any degree.

Kaplan and its fellow for-profits have found some advocates and admirers beyond their own ranks - the writer Anya Kamenetz, for one. She is the Yale-educated daughter of LSU professors who wrote the book "DIY U," as in Do It Yourself University. Kamenetz says the same energy and innovation that marked the land-grant universities in the 19th century is seen in the for-profit universities today. And she says the same criticisms are heard.

Ms. ANYA KAMENETZ (Author): The same kinds of controversies that we're seeing now with for-profits were seen in the 19th century, as well. That, you know, that you're taking the classical curriculum, which had been undisturbed for hundreds of years and you're shoe-horning in all these, you know, lessons about botany and vaccinating hogs, and what does that have to do with, you know, classical traditions?

And the fact was that the curriculum had to adapt. You know, even back at Harvard and Yale, they saw what was happening with the universities in Wisconsin and in Michigan. And, you know, at Yale they founded the Sheffield Scientific School in the 19th century. And they said, well, we actually have to use laboratory science and make it part of our curriculum because being useful, being up to date, being even vocational is actually part of the new mission.

SIEGEL: And being profitable? Is that consistent with an educational mission? Well, as enrollments at for-profit universities grow, that's a question we're likely to see answered in the coming years.

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