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Beyond the News

A nonprofit acquires a for-profit

Deconstructing Purdue’s absorption of Kaplan
University Business, June 2017
PURCHASE PURSUIT—Purdue President Mitch Daniels is framing the Kaplan acquisition as a way for the university to become a digital player in the evolving postsecondary education space.
PURCHASE PURSUIT—Purdue President Mitch Daniels is framing the Kaplan acquisition as a way for the university to become a digital player in the evolving postsecondary education space.

Purdue University surprised its faculty and the general higher ed sector this spring with its plans to acquire Kaplan University for a symbolic $1 (with a revenue-share plan spanning 30 years). Less noted is the opportunity Purdue has to learn from its new unit.

Purdue, an Indiana land-grant institution, will form a new, public university comprising Kaplan’s 15 campuses and learning centers, along with its 32,000 students and 3,000 employees.

The new school must receive accreditation and authorization from the U.S. Department of Education, the Indiana Commission for Higher Education and the Higher Learning Commission.

It will exist as its own institution within the Purdue University system, alongside regional campuses in Indianapolis, Fort Wayne and northwestern Indiana, says Brian Zink, Purdue’s senior director of news and information.

Dubbed NewU for the interim, this primarily online university will continue Kaplan’s open admissions policy. NewU will also hire and contract its own faculty. However, Purdue will exercise control over the university through a six-person board that includes five Purdue trustees.

This board will oversee and approve all academic, budget, marketing and operational functions of NewU, says Zink. The school will not receive state appropriations; it will instead subsist on tuition and fundraising efforts.

Kaplan’s specialized technology gives Purdue a better chance at attracting and retaining the ever-growing sector of nontraditional students.

“Serving this population requires a set of online program offerings and technical capabilities that the Purdue system currently lacks,” says Zink. “Were Purdue to attempt to develop such capabilities on its own, it would take years and significant financial resources.”

Despite faculty mistrust and media scrutiny of the deal, Purdue stands to learn from its new online unit, says Martin Kurzweil, director of educational transformation with the nonprofit education consultants, Ithaka S+R.

“The Purdue administration and faculty are quite interested in active learning, analytics and competency-based education,” he says. “Kaplan presents a coherent model for how to do that.”

Kaplan’s three-tier hierarchy of academic program directors; course leads who create curriculum; and instructors is nimble, in terms of integrating new content or shifting pedagogical methods. A standard three-part student assessment model is used by all departments.

The acquisition also includes Kaplan’s student data collection system. This designated team of researchers constantly runs trial interventions at the course level through the school’s LMS, then implement changes to improve student learning.

Defining a successful deal

The effectiveness of Kaplan’s online approach is difficult to prove—largely due to the institution’s declining enrollment numbers (down 22 percent from 2015 to 2016). “Kaplan has seen microlevel improvements, but they haven’t translated to observable, macro-level changes in student outcomes,” says Kurzweil.

Experts are unsure if the quality of education is leading to lower enrollment, or if these numbers are results of a worsening reputation and increased federal scrutiny around the for-profit education industry.

Ultimately, to prove its worth, NewU must broaden Purdue’s more traditional reputation as a research university, in addition to thickening the revenue stream, says Brian Mitchell, director of the nonprofit Edvance Foundation.

“President Daniels should make sure there is sufficient community input in the program. You can win accreditation and board approval, but shared governance is ultimately more important than revenue earns on campus.”

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