Purdue University has acquired the for-profit chain Kaplan University and its online platform to launch Purdue Global. (Meredith Nierman/WGBH News)
It's unlike any deal we've seen in the history of higher education. For the first time, a state university is buying a for-profit college.
Earlier this month, a regional accreditor in Indiana approved Purdue University's acquisition of Kaplan University. While Purdue administrators cast this as a move to enroll more adult students, some faculty and outside observers are deeply skeptical.
At Purdue University in West Lafayette, Indiana, Kate Webber works as an account clerk. Webber, 27, acknowledged it’s not the most glorious job.
“It's basically a lot of data entry and helping parents and students on the phone with questions about their accounts," Webber says, laughing about dealing with some calls from angry parents and students who don’t like paying tuition.
After high school, Webber was one of those Purdue students on the other end of the line.
“I was in several different programs, trying to figure out what I wanted to do,” Webber recalled. “I was in speech, language and hearing sciences. I was in interior design. The last one was wildlife biology."
Frustrated, drifting and worried about accumulating student loan debt, Webber dropped out.
Now, she wants to finish a degree in business administration. Next month she plans to be one of the first students to enroll in the new Purdue Global, a joint, non-profit university run by Purdue and Kaplan online.
The total cost for a bachelor's degree will be $39,000. That's compared to $80,000 on campus.
"It just really gives me the flexibility I need to work a full-time job and still pursue my other career aspirations," Webber said.
With the number of college-age students declining, schools in the Midwest and New England face tough times. That's why some schools struggling to control their costs are embracing older learners online to weather the storm.
In his annual State of the University address in Boston, University of Massachusetts President Marty Meehan said he wants to expand online courses to reach working class adults.
“Growing our online footprint will make a UMass education more affordable, not just by delivering it at a lower cost but by generating revenue to hold costs down for all of our students," Meehan said.
To generate revenue on Purdue's campus, President Mitch Daniels announced last year the state university known for its engineering and science programs was acquiring Kaplan, a for-profit online college chain owned by the Graham family, the former majority owner of The Washington Post.
For years, Kaplan University had been losing students and money. But the Graham family decided to keep the profitable SAT prep program that shares the Kaplan brand.
The price? One dollar.
Under the deal approved by the Higher Learning Commission, Kaplan will continue to operate its online platform, and its 32,000 students will transfer to Purdue Global.
"The average student at what has been Kaplan University is a 33-year-old woman - three fourths are women - with a family and job, who had some college credit but didn't finish,” Daniels said. “Life somehow intervened."
Purdue University president Mitch Daniels. (AP/Michael Conroy)
The former governor of Indiana said he is trying to reach some of the 36 million Americans who have some college credit but no degree. That goal, he said, is consistent with the original mission of land grant universities that the federal government first authorized during the Civil War.
"We were put here by Abe Lincoln and his allies to open the doors of higher education beyond the wealthy, beyond the privileged and the elites,” Daniels said. “While we pursue excellence in research and scholarship every day, we are still tightly wedded to that mission of extending the franchise of education."
Of course, Purdue and Kaplan are two very different institutions. Sitting in his office, Daniels said the unusual pairing started with a call from Don Graham.
"He called me up and said, 'This is probably going to be a short conversation. You probably wouldn't go for anything like this,’” Daniels recalled. “I said, 'What do you got in mind?' Fifteen minutes later we were arranging more serious conversations and five months later we shook hands."
Listen to On Campus Radio’s extended interview with Purdue president Mitch Daniels:
For now, former Kaplan faculty will make up all of the faculty of Purdue Global. That’s one of the reasons more than 300 Purdue professors have signed a petition opposing the acquisition. Many are afraid of retaliation if they speak out so they didn't want to comment for this story.
Some faculty have criticized Daniels for striking a deal behind closed doors without consulting them.
Daniels dismissed that criticism.
“It's not their decision,” he said. “The trustees of Purdue University unequivocally have the right to decide where we will place institutions."
Some higher ed analysts see the move as an existential threat to public higher education.
Robert Shireman is a senior fellow at the Century Foundation, a New York-based think tank. Shireman worked in the Education Department during the Obama administration, which cracked down on for-profit college chains for exaggerating its job placement and graduation rates. Kaplan faced legal challenges over its recruitment practices and the quality of its teachers. Even though Purdue is converting Kaplan into a nonprofit, Shireman opposes the deal.
"They are claiming that this is a public university and, as it stands, there is too much control in the hands of what continues to be a for-profit corporation," said Shireman, who worries Purdue is simply putting a nonprofit label on the same old product.
"Several years ago I was actually on a recruiter call for Kaplan University and at the time one of the things that the recruiter bragged about was, ‘We're owned by The Washington Post,’ and it was their way of gaining credibility,” Shireman recalled. “I think, this Purdue University brand is how they are finding a marketing tool for something that they really don't deserve."
Scott Jenkins, strategy director for state policy at Lumina Foundation, which is a financial supporter of WGBH News, disagreed.
He called Purdue's acquisition of Kaplan a bold experiment.
"What Kaplan does really well is something that Purdue does not do really well,” Jenkins said. “That is having a technology-based platform that can provide high-quality education to typically adult students."
He means students like Kate Webber. She plans to earn a bachelor's degree online and then go for her MBA.
Purdue Global officially launches on Monday, April 2, and, if it's successful, higher education leaders predict we'll see other for-profit colleges try to improve their image and increase their enrollment by becoming non-profit institutions.