Survey Of Purdue University Faculty Regarding Kaplan Purchase Program Form
Purdue on Thursday announced an agreement to accept the transfer of 32,000 students, 3,000 employees and additional assets of Kaplan University. Kaplan is a for-profit operation owned by Kaplan Higher Education LLC and Iowa College Acquisition LLC, both subsidiaries of Graham Holdings Company, formerly known as the Washington Post Company. Sep 11, 2018 - Criticism of the Kaplan purchase and Purdue Global launch has been fierce. Once been asked to review program changes within the curriculum or vote on them. Apparently, Purdue University faculty will be or are being offered. Yes, years ago the faculty attempted to form a union but that was viewed.
In an unprecedented move, a public research university, Indiana's Purdue University, is buying Kaplan University, a large for-profit chain with a mostly online footprint.The deal will lead to the creation of a, which under some as yet undetermined form of Purdue's name will offer credentials ranging from certificates to doctoral degrees, online and at 15 campus locations.Kaplan currently enrolls 32,000 students and employs 3,000 faculty members and other staff. All will transition to the new Purdue subsidiary. Kaplan's parent company, Graham Holdings, is publicly traded and, until a few years ago, was the owner of The Washington Post.Purdue has in recent years won fans and faced some controversy for entrepreneurial moves led by its president, former Republican governor of Indiana Mitch Daniels Jr. The university said the former Kaplan University would become a nonprofit called New University (the name Purdue is using for now), which will operate as a wholly owned subsidiary of the public university. The remaining Kaplan Inc., which already sells a range of mostly technology related services to nonprofit colleges, will continue to provide nonacademic support to the new nonprofit under an agreement with a 30-year term, with a buyout option after six.Terms for the deal include only a 'nominal' up-front payment, according to a. 'Kaplan is not entitled to receive any reimbursement of costs incurred in providing support functions, or any fee, unless and until New University has first covered all of its operating costs,' the filing said.Like most large for-profits, Kaplan's holding company has in recent years struggled with declining enrollments and unflattering attention from federal and state regulators.
For example, Kaplan Higher Education in 2015 paid $1.3 million to a federal whistle-blower's allegations that the company employed unqualified instructors. Yet Kaplan University, which is separate from the former Kaplan Higher Education campus involved in that lawsuit, still has a large infrastructure that will allow Purdue to immediately be a major player in online education.
Purdue will join several nonprofit institutions that are increasingly dominating online education, including Arizona State, Liberty, Southern New Hampshire and Western Governors Universities.“None of us knows how fast or in what direction online higher education will evolve, but we know its role will grow, and we intend that Purdue be positioned to be a leader as that happens,” Daniels said in a written statement. “A careful analysis made it clear that we are very ill equipped to build the necessary capabilities ourselves, and that the smart course would be to acquire them if we could. We were able to find exactly what we were looking for.
Purdue University managed to make a big splash without fronting cash in its deal to acquire Kaplan University and its major online education presence.That’s a key point in an era when public higher education institutions are increasingly saddled with tight state funding and rising cost pressures. But it comes with trade-offs. Purdue agreed to a lengthy contract requiring it to buy support services from parts of the Kaplan operation that will remain tied to a for-profit business.
The contract limits Purdue’s early financial downside, but getting out of it in the future would come at significant expense.Other details in the deal are also pushing the boundaries of what it means to be a public university. Purdue plans for the university it is acquiring from Kaplan to use no state appropriations and instead draw its operating funding from tuition and fund-raising.
It has also been exempted from state open-records laws. As a result, opposition is mounting from faculty and open-government groups.Purdue made waves last week when it, a bold attempt to jump into the online space with both feet in order to better serve working adult students. The major land-grant university in Indiana will acquire the academic operations of Kaplan University, a for-profit chain that’s part of the publicly traded company Graham Holdings.About 32,000 Kaplan students and 3,000 employees are set to become part of Purdue, which has almost no undergraduate presence in online-only programs.
Purdue will turn the former Kaplan University into a new legal entity, an online-focused nonprofit university structured as a public benefit corporation. The new university will be slotted into Purdue’s current structure, which consists of a selective flagship campus in West Lafayette, Ind., and another set of regional campuses that together post head-count enrollment of nearly 69,000 when counting undergraduate, graduate and professional students. The new university will bear a yet-to-be-determined version of the Purdue name.The deal for Kaplan University, which has been losing enrollment and revenue recently, can be seen as another in a long line of blows against an already struggling for-profit sector that has drawn sharp criticism for failing to graduate students and leaving them with high debt levels. It can also be seen as a buy-low opportunity for Purdue, which was able to sweep in and pick up a functioning operation with tens of thousands of students in a sector where it previously did not compete.Purdue’s president, Mitch Daniels, cast the acquisition as a pivot to the future during an interview with Inside Higher Ed last week.“I don’t know where online is going, but I want this university, when I’m long gone, to be a leader, to be prepared at least to compete,” said Daniels, a Republican former governor of Indiana.
“We were not going to be there under the status quo today.”But the deal’s financial details also set up a symbiotic relationship between the public institution of Purdue and for-profit operations that will remain under the Kaplan name. Kaplan retains the rights to the name Kaplan and the Kaplan Platform of information technology infrastructure.Digging Into the Deal's TermsPurdue will pay the nominal fee of $1 for Kaplan’s academic side. Instead of an up-front payment, Purdue has agreed that its new university will receive a range of support activities from Kaplan under a 30-year agreement. Those services will include technology support, help desk functions, human resources, admissions support, financial aid administration, marketing, international student recruiting, business office functions, accounting, first-year student advising and some test-preparation services.Kaplan will be paid for the services it provides only after Purdue’s new university has generated enough revenue to cover its operating costs and, in some cases, other payments, according to filed with the U.S. Securities and Exchange Commission.
For the first five years of the new university’s operation, it is guaranteed an annual “priority payment” of $10 million beyond its operating costs. If its revenue is not enough to cover the $10 million payment, Kaplan will cover any gap. The new university could also receive an efficiency payment if it finds savings in its budgeted operating costs.After those required payments are met, Kaplan will receive money from Purdue’s new university for the services it provides.
Kaplan And Purdue
It will be reimbursed the costs of providing support activities. It will also receive a fee of 12.5 percent of the new university’s revenue.In other words, Kaplan anticipates receiving payment for services provided plus a share of revenue. It is also, however, guaranteeing that Purdue’s new university will generate at least $10 million per year in new revenue for five years.The deal’s structure looks in many ways like an online program management, or OPM, contract. But the revenue share is low by the standards of current contract standards, which often call for providers to receive four or five times the share Kaplan is in line to receive.Also, the length of the services agreement is unusual. Many institutions are looking for shorter OPM contracts right now, according to an annual report from consulting and research firm Eduventures. A three-decade contract is essentially unheard-of.“It seems like a low percentage, given the length of the contract,” said Howard Lurie, principal analyst of online and continuing education at Eduventures. “The largest OPM providers will range between 45 percent and 65 percent revenue share that they’re taking from the institution.”Purdue and Kaplan did not share estimates for the fees that would be paid under the agreements.
Kaplan University
Kaplan’s higher education business segment, which is made up of Kaplan University, generated $617 million in revenue in 2016,. The figure can’t be used for fee estimates, however, because Kaplan University’s School of Professional and Continuing Education is included in the higher education line item of federal filings but is not part of the Purdue deal. The school has roughly 3,700 business-to-business clients, and more than 460,000 students used its exam-preparation offerings in 2016.Purdue’s new university can terminate the 30-year services agreement after its sixth year, according to filed with the SEC. To do so, it would have to pay a fee equivalent to 125 percent of the new university’s total revenue in the previous year.The agreement automatically renews for five-year terms after its first 30 years. If Purdue’s new university opts out of the agreement after 30 years, it would have to pay a smaller fee - the equivalent of six times the fees it paid to Kaplan in the prior year.Termination fees the university would pay would take the form of debt - 10-year senior notes.