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Bad Report Card for a Tutoring Business


Test-prep titan Kaplan's SCORE! unit is struggling to stem declining enrollment

Business is slow at Kaplan's SCORE! Educational Center in Harlem. Like other SCORE centers across the U.S., it aims to boost grades among the 4-to-14 crowd at prices ranging from $169 for eight hours of computer time to $2,250 for a 45-hour tutoring package. In a recent afterschool session, six students came in over a two-hour period. Chiniqua Barnhill, a nurse, pays $449 a month for her daughter Atyia, 6, to get three hours of computer time a week and an additional two hours with a tutor. Barnhill says she likes the tutor, but Atyia "gets bored with the math, at least the way it's being taught" on the computer. Already stretched financially, Barnhill won't come back once her pre-selected sessions are over.

Kaplan has become a $2 billion powerhouse in the Washington Post Co. (WPO) portfolio by feeding a growing global appetite for education and professional training. But it may have overestimated how much parents will pay to give their kids an edge in school. In 2006, SCORE had 161 locations in 11 states, but this year it's heading into the busy summer season with fewer than 80.

FRESH SOFTWARE

With first-quarter revenues down 46%, President Justin Serrano is struggling to revive the business. He blames the closures on outdated software and a failure to achieve "saturation" in cities such as Atlanta. SCORE is jazzing up its software programs and rolling out new ones. It's making a stronger push into personal tutoring, where one instructor sees up to three students at a time. And it has branched into $11 exercise books.

What hasn't changed is the SCORE approach to learning. That means a "positive, shame-free environment," says Serrano, in which students work on computer programs customized to their skill level. Questions are directed to a staffer, who watches up to seven students at a time. Top scorers get a high-five, try to shoot a soft basketball into a hoop, and earn little magnets to cash in for items ranging from trinkets to a day pass to Disneyland (DIS) (a prize that costs $66 at the gate but takes roughly 200 hours of center time to earn).

Some say the problem is the business model, not the software. While premium-priced computer training might make sense for the college-bound, trying to prep for standardized tests, it's less compelling for kids who can use afterschool programs and educational DVDs. Lloyd Thacker, director of the Education Conservancy, a watchdog group, notes that SCORE doesn't disclose the credentials of its tutors on its Web site. (The company says all tutors get standard training.) Thacker also takes issue with linking achievement to rewards: "It's more, 'What do I have to learn in order to get this rubber ball?'"

Tutoring for the junior set seemed like a good bet when Kaplan bought then-tiny SCORE from founder Alan Tripp in 1996. Within four years, SCORE was celebrating its 100th outlet at a posh, all-employee dinner at a beachside resort in Santa Barbara, Calif. Now the question is whether SCORE can stop the bleeding. Serrano says it's a small part of Kaplan but "definitely a business we care about." Some wonder if Kaplan, whose sales grew 21% last year, will cut its losses. Barnhill, for one, plans to spend more time helping her daughter at home.

McConnon is a staff editor for BusinessWeek in New York.

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