Purdue Buys For-Profit Kaplan University, Offers Discount to Indiana Residents

Published August 15, 2017

Purdue, a public, land-grant university in Indiana, announced in April it had acquired Kaplan University, a for-profit online college, for $1. Mitch Daniels, president of Purdue and former Indiana governor, said in a statement the acquisition was the best way for the university to serve a broad range of students across the state, especially those “who must largely balance the demands of school with the obligations of careers, family, and other burdens of adult life.”

In-State Tuition Cuts

Purdue is calling its online subsidiary “Purdue New U.” Kaplan’s professional certification programs will remain separate from Purdue.

Kaplan instructors and curricula will initially remain the same, though in June the New U board announced it would “knock 45 percent off the quarterly credit hour price for Indiana residents pursuing an associate’s or bachelor’s degree through the online university,” the Layfette Journal & Courier reported. “The second act was to offer New U courses at no cost for Purdue’s 12,513 benefits-eligible employees—including 10,591 on the West Lafayette campus. Family members of Purdue employees would get 50 percent discounts on New U courses.”

Enrollment Rise and Fall

Kaplan University started in 1938 as a student-preparation school for standardized tests such as the SAT. The Washington Post purchased the school in 1984 and later expanded it to offer formal college education. Jeff Bezos, founder of Amazon.com, bought The Washington Post, thus making Kaplan essentially independent.

Like other for-profit universities, Kaplan has gone through difficult times recently, in part because of strict regulations imposed on for-profits by the U.S. Department of Education under President Barack Obama. Kaplan’s enrollment declined from more than 112,000 students several years ago to approximately 32,000 today.

Opposition and Praise

Purdue’s acquisition of Kaplan raised the ire of some faculty members, and the Indiana chapter of the American Association of University Professors issued a statement of opposition to the plan, saying, “Non-profit institutions serve the public good; for-profit private institutions serve corporate interests. The two should not mix.”

Rep. Virginia Foxx (R-NC), chair of the U. S. House of Representatives Committee on Education and the Workforce, praised Purdue’s acquisition, saying, “Innovation in higher education is always a good thing. This is an exciting development, one that will empower contemporary students in Indiana and across the country to gain the skills and education they need.” 

‘An Autonomous Unit’

Alana Dunagan, a higher education research fellow at the Clayton Christensen Institute, says Purdue’s model in acquiring Kaplan is unique.

“Part of the beauty of what Purdue has done is structuring the new school as an autonomous unit,” Dunagan said. “Too often, online education is what we call a ‘hybrid’ innovation: using a new technology but really packaging it in the old business model at the exact same cost, with requirements and structure just the same, not taking advantage of the cost structure or the pedagogical improvements possible. An autonomous unit could rethink, from the ground up, how the program could be more workforce-aligned and serve the needs of students who have traditionally been left out or shoved to the margin.”

‘A Really Innovative Leader’

Dunagan says it’s unlikely many universities will copy Purdue’s action.

“It requires a really innovative leader at the top, someone who takes personal risks,” Dunagan said. “As a former governor, Mitch Daniels has the business expertise and the political chops to do it, but average college presidents may not be able to, even if they have the vision to see beyond the biases of higher education.”

As Indiana’s governor, Daniels brought a campus of Western Governors University to the state to expand competition in higher education and encourage online education. Daniels became Purdue’s president in 2013. Two years later, Fortune magazine placed him at No. 41 on its list of “World’s Greatest Leaders,” writing, “He’s frozen tuition, cut costs by zeroing out administrative waste, and negotiated a deal with Amazon to save students up to 30 percent on textbooks.”

Jane S. Shaw ([email protected]) is School Reform News’ higher education editor.