Modern day seismographs measure the timing, location, and power of how the earth bends and sometimes breaks. Although these are highly precise instruments, they can’t always predict when and where the next major earthquake will occur.
Purdue University’s recent announcement of its intent to acquire Kaplan University, a wholly online, for-profit school, has sent shockwaves across higher education. Reactions have mounted, and we have been gauging how a broad range of stakeholders may be affected by this move, and what may lie ahead for working adults and online learners.
As we prepare for our June Summit, we thought it would be timely and relevant to explore our own higher education seismograph and outline what we currently know, don’t yet know, and want to know about Purdue’s earthshaking acquisition.
What We Know: Opposites Still Attract
While change comes hard and often slowly to higher education, Purdue’s acquisition results in the birth of an entirely new institution, managed by Purdue, and according to the SEC filing, serving “non-traditional adult learners.” There’s a strong whiff of pragmatism here: in a single day, Purdue may have become one of the largest public institutions serving online adult students.
The latest aftershocks come from the Purdue faculty senate, which has overwhelmingly passed a resolution calling for the deal to be rescinded on the grounds that it was executed without input from faculty and others. This coincided with the revelation that the new institution would be exempt from the same open meetings and records laws governing Purdue, one of Indiana’s most prestigious public universities. While these developments are significant, we expect this deal will still move forward.
Purdue’s acquisition did not come entirely out of the blue, nor is it entirely illogical. In the wake of the March acquisition of Education Management Corporation (EDMC) by the Dream Center Foundation, Purdue’s move further blurs the boundary between for-profit education providers and non-profit universities. Despite their differences, Kaplan and Purdue are inverse images of each other. Enrollment patterns in 2015 paint a revealing portrait:
Source: IPEDs and WCET, 5/1/17
Purdue can now become one the largest public providers of online learning to working adult learners. But why now? Tressie McMillan Cottom, author of Lower Ed; The Troubling Rise of For Profit Colleges in the New Economy, has suggested that Purdue is calculating that Indiana’s aging workforce and persistent rates of underemployment merit a pivot toward better serving this population.
In turn, Kaplan University gets a new lease on life. It secures a long-term commitment to do what it knows how to do: recruit, enroll, and support these learners. Current Kaplan University students and future graduates may now benefit from an affiliation with an easily recognized and widely respected research institution.
Finally, we think that this acquisition suggests a new model of online program management (OPM). While Purdue spent a nominal fee of $1 to complete this acquisition, Kaplan receives a 30-year, contractual commitment to the new institution to provide technology support, financial aid administration, help-desk services, and marketing. If the new institution is stable and profitable, Kaplan will receive 12.5% of annual revenue.
What We Don’t Know: Is this the New “Morrill” High Ground?
Stepping back, is Purdue’s move a one-time event or the beginning of a broader trend in which non-profit schools and organizations consume for-profit institutions? Conversely, as some have claimed, is this the beginning of a wholesale privatization of higher education? While many observers are weighing in on these questions, we’ve heard very little from other critical stakeholders.
Among Kaplan’s for-profit, online brethren, for example, we wonder whether they too are sizing up opportunities for a rebirth as part of a public or private non-profit. Are declining enrollments pushing the for-profit sector, and their investors, to rethink their long-term viability? Gene Wade of UniversityNow notes that although for-profit vendors routinely deliver services to non-profit schools, e.g., the OPM marketplace, Purdue’s acquisition “challenges higher education’s cultural norms in a big way.”
By the same token, are other public, land-grant institutions mulling their own future? Purdue’s president, Mitch Daniels, has characterized the Kaplan acquisition as a recommitment to the 1862 Morrill Land-Grant Act, which mandated that publicly funded universities “teach such branches of learning as are related to agriculture and the mechanic arts … in order to promote the liberal and practical education of the industrial classes.”
While many public, land-grant schools operate effective continuing education and online programs, perhaps Purdue has issued a clarion call that the 36 million Americans over the age of 25 with no college degrees—including 900,000 Hoosiers—will be better served by their own public institutions than by the private sector. While state funding for higher education is trending downward, perhaps Purdue has engineered a model that might be more palatable to other state legislatures.
What We Want to Know: A Passing Tremor or Signaling the Next “Big One”?
We are eager to hear from other voices. We expect that The Higher Learning Commission (HLC), Purdue and Kaplan’s accreditor, will take this opportunity to carefully explore the long-term impact of this acquisition on students and faculty at both institutions. This may be an opportunity for HLC to play a forward-thinking role in how the blurred line between for-profit and non-profit models can be best monitored.
Finally, setting business models aside for a moment, is this acquisition good for working adult students? While both Purdue and Kaplan have had some experience with certificate programs in the past, each institution has prioritized degree programs. It would appear that this deal doubles down on the value of online degrees. Given the demands and needs of working adults, it is worth asking, are degrees really what they need? We know, for example, from our ongoing research on adult learners that while they do still prioritize degrees, there is growing interest in shorter-form online programs. Will Purdue’s new institution, with support from the former Kaplan University, effectively prepare working adult learners for an evolving workplace?
Higher Education Remastered
Eduventures’ upcoming Summit, Higher Education Remastered, June 7-9 in Boston, will be a timely and relevant venue to further address the meaning and implication of Purdue’s acquisition. We will explore the current state of for-profit online education with presidents from New Charter University, American Public University System, and Laureate Education. We will also take a step back and put the Purdue-Kaplan deal in a broader analytical context, when Richard Garrett, Eduventures’ chief research officer, probes our latest research into online learning and adult learners.
Come join us in June. Whether there are more aftershocks from Purdue’s acquisition or not, it will be the right time and right place to further assess the opportunities for progress and growth in higher education.Register Today