Purdue Wins State Approval for Controversial Deal With Kaplan U.

Dear Commons Community,

The Chronicle of Higher Education is reporting that Purdue University won Indiana state approval for its deal to take over Kaplan University. But as the transaction now moves to the U.S. Department of Education for review of a “change of control” request, Robert M. Shireman, a senior fellow at the Century Foundation and critic of the deal, is urging the department to reject it because, he argues, control isn’t really changing.  As per The Chronicle:

“He also argues that by approving Kaplan’s application, the department would be agreeing with Purdue’s implicit request to treat the new venture as if it were a public university, even though Purdue actually plans to create a private entity to run it and proposes other actions that raise questions as to how public it really will be.

Under the terms of the deal, the yet-to-be-renamed, 29,000-student Kaplan University would rely on Kaplan Inc. for services such student recruiting, marketing, and technology, similar to how many colleges now contract with outside companies, known as “online program managers,” to run their online education programs. (When the deal was announced, in April, Kaplan’s reported enrollment was 32,000, both online and at 15 campuses and learning centers; the university’s parent company, Graham Holdings, disclosed the latest enrollment figures, along with declines in revenue from the venture, this month.)

“This is Kaplan reaching an agreement to put Purdue’s name on Kaplan’s institutions, while Kaplan maintains an enormous role in controlling the future of those institutions” because of rights it retains under the contract, said Robert M. Shireman, a senior fellow at the Century Foundation, in an interview on Thursday. “It’s more like a ‘super-OPM,’ rather than an actual sale.”

Mr. Shireman laid out his concerns this week in a two-page letter to A. Wayne Johnson, the Education Department official who runs the federal student-aid programs. Mr. Johnson’s division oversees conditions under which colleges can receive federal student aid.

The contract between Purdue and Kaplan “does not actually constitute a change of ownership,” Mr. Shireman asserts in the letter. Instead, he says, the contract lays out a long-term operating agreement “with provisions that could someday result in Purdue owning the schools based on an as-yet-undetermined price.” And, the letter continues, “Purdue has not agreed to pay that price nor demonstrated that it could or would pay the price.”

The Purdue/Kaplan venture represents a very different organizational structure and will continue to be watched most carefully in higher education circles.



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