Purdue Global Suffered a $43 Million Loss Last Year!

Image result for purdue global"

Dear Commons Community.

In 2017, Purdue University announced a partnership with the for-profit Kaplan University to create a new hybrid public-private partnership.  The higher education world viewed this move with a good deal of astonishment and speculation.  Two years later, the partnership has not shown much success and last year posted a $43 million loss.  Below is a review of Purdue Global courtesy of The Chronicle of Higher Education.

Tony

—————————————————————————————————-

Purdue Global Has Had a Rocky Start. Is It Growing Pains or a Sign of Trouble?

By Lee Gardner

January 21, 2020

“In April 2017, Mitch Daniels stunned academe with the announcement that Purdue University, where he is president, planned to acquire for-profit Kaplan University. With one stroke, the former Republican governor of Indiana drew market forces close to the heart of a public research university and, overnight, positioned Purdue to compete with established online “mega-universities” like Southern New Hampshire University.

Two and a half years later, the audacious deal is showing signs of trouble. Daniels, who had predicted that the deal would produce a “very substantial revenue stream,” has said that Purdue University Global, as the former Kaplan online programs are now known, is not “achieving the growth we thought we might.” The university’s annual financial report, released this month, shows that Purdue Global suffered a $43-million loss last year, following a $18-million loss during the year prior.

While Purdue Global is less than three years old, its course so far hints at the potential pitfalls of trying to rise to the mega-university level. But does its halting progress to date indicate a wrong turn on Daniels’s part, or just a bumpy start?

Purdue Global’s lackluster beginning has provided ammunition for critics within and outside the university who fret over the possible damage to Purdue’s reputation caused by bringing a for-profit entity into a public institution — a notion that many faculty members objected to from the outset. “We were told this was a can’t-fail operation, that it was going to be profitable and successful, that it was going to pay for itself,” says Bill Mullen, a professor of English. “There’s been very little to crow about here about Purdue Global’s performance so far.”

“The level of transparency at Purdue Global is not on the level that we typically expect from a public university.”

Critics like Mullen also worry that Purdue Global might be just business-as-usual Kaplan University under another name. While it is owned by Purdue and overseen by a Board of Trustees appointed by Daniels, including four members of the university board, many of Purdue Global’s functions are still provided by for-profit Kaplan Higher Education Inc., its former owner. And many Purdue faculty members say they still have no idea who’s teaching Purdue Global’s courses or what’s being taught; about 45 percent of the 1,700 Purdue Global faculty have a doctorate, according to Purdue.

“The level of transparency at Purdue Global is not on the level that we typically expect from a public university,” says Yan Cao, a fellow at the Century Foundation, a nonprofit policy group.

But this unusual hybrid, which was formally approved in March of 2018, is still new and a work in progress, according to Betty Vandenbosch, a former president of Kaplan University and now chancellor of Purdue Global. Purdue Global is a new name and, effectively, a new player in the increasingly competitive marketplace for adult learners. “Obviously, it’s hard to start a brand new university,” she says. Purdue Global’s financial loss this year was due, in part, to nearly $30 million spent on marketing.

Making a big spend for marketing was “a logical, strategic decision,” said Tim Doty, the director of public information and issues management for Purdue, in an email. He added that Purdue Global expects to make a profit in fiscal year 2020 due to increased enrollment, better retention, and “normalized levels of investment in branding/marketing.”

Vandenbosch is sanguine: “We think that a year and a half isn’t very far in. We’re in this for the long term.”

A lot of good things have come from the acquisition, Vandenbosch says. For example, Purdue Global is introducing programs that it would never have been able to support without its Purdue ties, such as a new bachelor’s degree in professional flight.

Purdue Global is also making strides in the quality of education it provides. In 2017, Kaplan University’s pass rates for the National Council Licensure Examination, the standard licensing exams for nurses, were well below national averages across the board — as low as 59 percent for Kaplan graduates with a bachelor of science in nursing, compared with a national average of 90 percent for that year. As of the first quarter of 2019, Purdue Global nursing graduates’ pass rates on the exams now exceed the national averages.

But Vandenbosch acknowledges that Purdue Global has struggled to bring in as many students as hoped. In 2017, when the Purdue deal was announced, Kaplan had nearly 31,000 students, down from about 70,000 in 2010. Enrollment at the new Purdue Global fell to around 29,600. Even though enrollment grew by about 5 percent last year, it’s still only about 31,000. “You always want more than you get,” she says.

It shouldn’t be surprising if an institution aimed at adult learners is experiencing lackluster enrollment, says Trace Urdan, the managing director at Tyton Partners, an investment-banking and consulting firm. Low unemployment has led to “a climate over all of continuing decline in working-adult enrollment, at least at the undergrad level,” he says. Data from the National Student Clearinghouse indicate that enrollment at four-year for-profit institutions, which cater to adult students, was down nearly 20 percent in 2019 from the previous year. Enrollment at community colleges, which offer many similar career programs, was down more than 3 percent over the same period.

Enrollment at for-profit institutions has also suffered due to accusations of poor-quality academics and predatory recruiting practices, charges that have ”severely damaged,” the sector’s brand, Urdan says. Some of these accusations have been directed at Kaplan specifically: Harvard Law School’s Legal Services Center issued a report in December 2017 featuring complaints from veterans and active servicemembers that Kaplan had misled them regarding costs, program quality, the transferability of credits, and other matters.

The deal Kaplan struck with Purdue was, in part, a way to save the former from its downward trajectory, Urdan adds. If Purdue Global’s enrollment isn’t doing as well as hoped, he says, it may also be because “whatever they were doing at Kaplan wasn’t magically fixed” by assuming the Purdue name.

Meanwhile, nonprofit universities with large online programs aimed at adult learners, like Southern New Hampshire and Western Governors Universities, are booming. Western Governors’ enrollment has grown from about 91,000 in 2017 to nearly 120,000 last year. Southern New Hampshire’s online enrollment has grown from more than 100,000 students in 2017 to about 140,000 over the same period.

The overall dearth of adult students may be depressing Purdue Global’s enrollment somewhat, Urdan says, but its administrators may also need to ask themselves, “Why should Southern New Hampshire be growing and we’re not?”

Purdue Global is now fully integrated into the larger university — on the latter’s website, at least. Purdue Global is listed on the home page alongside the branch campuses at Fort Wayne and Northwest, and its programs are intermingled with existing Purdue Online offerings for potential students to parse.

Matters are less settled for many professors at the main campus in West Lafayette, Ind. Mullen, the English professor, worries that students may confuse Purdue and Purdue Global, and that that confusion may be somewhat intentional. “Lots of people who see advertisements for Purdue Global on television think they’re getting a Purdue University degree,” he says. “Well, it’s not.” (Purdue Global receives no taxpayer funds, so, under a bill signed into state law on the day the deal was announced, it is exempt from open-records law requests.)

Purdue could have been more transparent during the acquisition of Kaplan, and it could be more transparent about Purdue Global now, says Cheryl Cooky, an associate professor of American studies and gender and sexuality studies and the chair of the University Senate. While the Senate convened a special committee to serve as a conduit for questions and answers between professors and administrators regarding the project, Purdue and Purdue Global could both benefit from more “open channels of exchange,” she says.

But Cooky is giving Purdue Global the benefit of the doubt. She sees it as an extension of the university’s land-grant mission, and a good way to serve a new cadre of students “without spending $50 million building a new building to house students 10 years from now.” She sees questions about the quality of instruction, or whether or not Purdue Global credits will transfer to Purdue itself, as “really elitist.”

For other faculty members, “it’s more a wait-and-see kind of thing,” says Deborah Nichols, an associate professor of human development and family studies and a co-chair of the University Senate committee on Purdue Global. She sees potential for the university to reach more students through Purdue Global, but adds that the way the acquisition was handled has increased many professors’ mistrust of the university administration: “It was hard to separate how this happened from whether or not this would be a good idea.”

Even Cooky, who is supportive of Purdue Global, has qualms about the secrecy with which the deal was struck, and how professors were kept out of the loop: “Faculty can sign nondisclosure [agreements] as well.”

Purdue Global may be expanding access, says Cao, from the Century Foundation, but access to what? “We’re not sure that they’re expanding access to a meaningful, high-quality product, rather than something as predatory as Kaplan was,” she says.

Purdue Global may not be the last public university/private provider hybrid, and with good reason, says Donald Kilburn, the chief executive officer of UMass Online, the University of Massachusetts’s online-education arm aimed at working adults. The demand for more educated workers, and the more than 30 million Americans with some college credit but no degree, have created “a national imperative for more providers,” Kilburn says. The question is, he says, how does a traditional university serve a large, nontraditional population at scale?

“Academia, like most businesses, is a copycat business.”

Asked if UMass would consider purchasing a for-profit provider, Kilburn says, “We’re looking at all strategic options at this point.”

It’s too early to count Purdue Global as a success or failure, but in the short term, it may serve as a cautionary tale that mega-university success isn’t as simple as signing a contract.

“Academia, like most businesses, is a copycat business,” says Mullen. There are so many unresolved questions swirling around Purdue Global “that a lot of us are concerned that this model will be replicated” elsewhere with even less vetting.

 

 

 

One comment