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A recent decision by an independent arbitration panel could dramatically alter the way test preparation companies, such as Stanley Kaplan Educational Centers and the Princeton Review, advertise their services. The panel ruled earlier this month that the Princeton Review must change its sampling methods to include a greater number of students when conducting research for its advertisements. According to Kaplan Executive Vice President Andrew Rosen, Princeton Review had used postcards mailed to former students after the test in order to measure the success of the program. Kaplan, however, relies on a random telephone sample of former students. Kaplan charged that the postcards did not provide an accurate assessment of students' scores. "Princeton had used, first of all, bad math," Rosen said. "That's a pretty serious flaw in a test preparation company." Kaplan also claimed that Princeton Review's sample method, which resulted in only a 25 percent response rate, did not provide an accurate representation of students' scores. Rosen cited Kaplan's own telephone surveys, which yield an approximate response rate of 70 percent, as an alternative. The panel ruled that, as of March 1996, all companies must use a sampling method which results in at least a 40 to 50 percent response rate. Kaplan officials praised the decision as a major victory. "This supports what students have long known -- that Princeton Review has been misleading students for years," Kaplan President and CEO Jonathan Grayer said in a statement. But Princeton Review officials downplayed the ruling, citing the arbitrators' decision that all sampling efforts had been conducted "in good faith." Princeton Review President John Katzman explained that his company's sampling methods have already been changed to more closely resemble Kaplan's and that any errors that might have occurred in the original sample were due to one ambiguous question on the postcard. The question asked Princeton Review students to report their "previous score." Some who participated in the survey were uncertain as to whether they should provide their most recent score or their score before they took the course. "I started getting nervous during the hearing that maybe our results really weren't comparable," he said. "So we started doing the studies with the other methodology." He added that the new results showed that Princeton Review's scores are still "way higher" than Kaplan's. Katzman said he was happy with the panel's decision because it also forces Kaplan to clearly label any subsets of groups it uses in its ads and to provide a clear disclaimer that their guarantee is not an average. He claimed that Kaplan's "guarantee" was higher than its average improvement and was presented in such a way that students could be misled.

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