Dear Commons Community,

Here is something we do not see everyday. Purdue University in Indiana is buying troubled Kaplan University to form a non-profit public benefit corporation called New University. As reported by USA Today and other media:

“Graham Holdings Co. announced this morning in a filing with the SEC that it plans to sell its for-profit Kaplan University to a new non-profit public-benefit corporation called New University that is affiliated with Indiana’s Purdue University, a state institution. Purdue confirmed the deal in a press release quoting its president, Mitch Daniels, the former governor of Indiana.

The press release describes the assets that Purdue will acquire as including Kaplan’s “15 campuses and learning centers, 32,000 students, 3,000 employees, and decades of experience in distance education.” But the release adds that the new entity “will operate almost exclusively online.”

Under the agreement, Graham Holdings says, it will “provide key non-academic operations support to New University for an initial term of 30 years with a buy-out option after six years.”

The Purdue release states that Kaplan will provide services including “technological support, human resources, facilities management and other administrative functions.” In other words, Purdue could keep paying Graham Holdings for decades to help run the New /old university. 

The details of the deal are now out. Graham is selling Kaplan University to Purdue for $1 ― potentially a big tax win for Graham, even as it has the chance to reap big annual returns from the service contract.

Betty Vandenbosch, the current president of Kaplan University, will be the chancellor of New University.

For the parties to go through with the deal, it needs regulatory approvals within a year from the U.S. Department of Education, the Indiana Commission for Higher Education and the private Higher Learning Commission, which is the accreditor of both Purdue and Kaplan University.
The deal looks like the latest attempt by the owners of a struggling, troubled for-profit college to salvage its investment, in an era where terrible abuses by many for-profit schools ― deceptive recruiting, sky-high prices, and misrepresentations to government overseers ― have tarnished the reputations and hurt the bottom lines of many companies in the industry, and led to new regulations to curb for-profit misconduct.”

This is an interesting new model for higher education and one that will be watched closely.

Tony