The deal will give Purdue immediate exponential growth in its online programs at a time when traditional, residential education is leveling off.
When Purdue University announced on April 27 that it was buying Kaplan’s online university business, shock waves went through the higher education community. It marked the union of one of the country's better known public research universities with a pioneer in for-profit higher education. And the higher ed community is watching to see how this new union turns out.
Purdue President Mitch Daniels said the university aims to make the school’s programs available to a vast new pool of students nationwide. “Nearly 150 years ago, Purdue proudly accepted the land-grant mission to expand higher education beyond the wealthy and the elites of society,” he said in a statement on the university’s website. “We cannot honor our land-grant mission in the 21st century without reaching out to the 36 million working adults, 750,000 of them in our state, who started but did not complete a college degree, and to the 56 million Americans with no college credit at all."
The deal specifies that Purdue will pay $1 to Graham Holdings for Kaplan University’s institutional operations and assets, but it's still pending approval from the U.S. Department of Education and Purdue’s regional accreditor, the Higher Learning Commission. These operations and assets include its 15 campuses and learning centers, 32,000 students, 3,000 employees, as well as 100 academic programs ranging from certificates to doctoral degrees. Kaplan will serve as a form of online program management provider (OPM), providing technology support, help-desk functions, and other administrative services. The for-profit Kaplan will earn money through a 30-year revenue sharing agreement.
The new university, which will carry some version of the Purdue name, will rely only on tuition and fundraising to cover operating expenses, using no state appropriations or funding from the Purdue system. While the institution will operate primarily online, Purdue will also acquire the existing 15 locations across the United States, including a facility in Indianapolis. The tuition policy for Indiana resident students is yet to be determined.
Other universities with large online programs, such as Arizona State University, have grown their programs gradually over several years. But this deal will give Purdue immediate exponential growth in its online programs, said Josh Kim, Inside Digital Learning blogger and ed tech expert from Dartmouth.
“The number of 18-22-year-old students is leveling off. Most of the growth in higher ed is in the graduate degree level for adult working professionals,” said Kim. “It’s difficult for universities to grow with only residential programs.”
Purdue’s main campus has an average student age of 20, whereas Kaplan’s online university has an average age of 34, according to Inside Higher Education. Compared to 85 percent of Kaplan’s students, only 1 percent of Purdue's 30,000 undergraduates are enrolled in fully online programs.
In a written statement, President Daniels said Purdue must better serve the growing number of nontraditional students. “Our modern, complex economy is stacked against these men and women. If they are to advance professionally, they must largely balance the demands of school with the obligations of careers, family and other burdens of adult life. Increasingly, these Americans are finding hope in high-quality, online programs tailored to their unique needs.”
The acquisition is a game changer for higher education, said Phil Hill, a market analyst and co-publisher of the e-Literate blog, and partner at MindWires Consulting. He compared the acquisition to the culture-shifting effect of Massive Open Online Courses (MOOC). “Purdue is a prestigious university putting its reputation behind this online effort. With MOOC, the fact that you had Stanford and Harvard making public online pronouncements that online education is valuable made students much more open and accepting of MOOC education.”
Whether the new university smoothly merges the quality and reputation of a Purdue degree with the efficiency of Kaplan are questions that remain to be answered. The higher education community will watch carefully as the new university develops. Kim hopes that Purdue will share what it learns and how it changes the institution. “My guess is that people will think differently now,” he said. “No one saw this coming. A lot of us are wondering what other models for online education we haven’t thought about.”