Purdue University Purchases For-Profit Kaplan University to Mixed Criticism

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Purdue University announced on April 27 that it has acquired the for-profit Kaplan University system, which comprises online learning programs, 15 campuses and learning centers, 32,000 enrolled students, and 3,000 employees.

According to Purdue officials, the acquisition will better enable the university to provide accessible higher education for working adults in Indiana and nationwide and will help Purdue become a leader in the growing online learning industry. Some critics, however, say it’s a move in the wrong direction for the university — or any public higher education institution for that matter — to align itself with a for-profit company like Kaplan.

Purdue purchased Kaplan University from its parent company, Graham Holdings Co., for $1 in a revenue-sharing agreement that allows current Kaplan officials to continue operating the university. Kaplan will remain a separate system from Purdue — operating largely online — meaning that it will not receive state funding. It will, however, be entitled to a reimbursement fee from Purdue for operating expenses, as well as 12.5 percent of its own revenue for the next 30 years. Kaplan University President Betty Vandenbosch, PhD, will be chancellor of the new system, and the school’s 3,000 faculty and staff members are expected to retain their positions.

Critics say that such deals allow predatory, for-profit schools to offer overpriced, low-quality education under the guise of being affiliated with elite nonprofit institutions like Purdue. Bob Shireman of the Century Foundation — a think tank that investigates for-profit institutions — told USA Today that the deal is akin to a bad restaurant being able to claim new ownership in order to improve its reputation without making any actual changes.

The U.S. Department of Education and various accreditation agencies have rejected past attempts by for profit schools to either become or become affiliated with nonprofit institutions. By obtaining the nonprofit label, such schools are able to avoid some of the strict regulations and oversight that have been placed on for-profit institutions in recent years. Kaplan is no exception, say some critics, who point to the fact that the school — like many for-profits — has been the target of government investigations and lawsuits.

Purdue officials say the deal helps to fulfill the university’s responsibility as a public land-grant institution to provide higher education to the people of Indiana, who will be eligible for tuition discounts under the new system. Similarly, the acquisition means that Purdue can reach a broader population of undeserved students, such as working adults and veterans, says Purdue President Mitch Daniels.

“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,” says Daniels. “None of us knows how fast or in what direction online higher education will evolve, but we know that its role will grow, and we intend that Purdue be positioned to be a leader as that happens.”