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Purdue Chases the Cash

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Wow.

Purdue University said Thursday it has acquired for-profit Kaplan University to extend its reach into online and adult education, an unusual move for a public institution.

“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,” Purdue President Mitch Daniels said in a 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.”

Instead of folding the for-profit school into its operations, Purdue plans to form a new university comprised of all 15 campuses and learning centers of Kaplan University, as well as 32,000 students and 3,000 employees. All existing Kaplan students and faculty will transition to the new school that has yet to be named.

The newly formed school will rely on tuition and fundraising to cover operating expenses, not state appropriations. It will primarily operate online, with no plans to expand the physical footprint beyond the existing 15 locations. Indiana residents will receive discounted tuition.

Mitch Daniels, so this is hardly surprising. You’d like to think that what this would do is provide greater accountability to for-profit colleges and bring them into the standards of real universities where, you know, students are actually educated and not exploited. But I think we all know that under Daniels’ leadership, what this is going to do is bring public education closer to the for-profit, online model, much to the damage of the poor students forced into this “courses.”

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  • Dr. Ronnie James, DO

    Also, Kaplan doesn’t work.

    • NewishLawyer

      What parts of Kaplan don’t work? I didn’t do Kaplan but I did do an SAT prep program and I thought it helped my scores a lot as compared to my PSATs.

      • Warren Terra

        Kaplan test prep was a cash cow and wasn’t widely hated or seen as unusually abusive for the industry (albeit I have no idea if they actually did a good job, and the industry has a lot of critics).

        Kaplan University was co-branded but was another kettle of fish entirely. They were infamous for failing to provide an education or even a degree and for basically deluding victims into signing over their federally guaranteed tuition loans and veterans’ benefits and then casting them aside.

        • erick

          My memory may be wrong, but wasn’t Kaplan test prep originally a stand alone company that had a decently regarded, expensive and fairly low volume product. Ar some point the Post bought it and took it mass market by lowering the price and quality. Then they expanded into the for profit college scam.

      • Morbo

        Programs that work presumably don’t sell for $1.

      • Rob in CT

        In addition to what others said about test prep and university not being the same thing…

        I, too, saw improvement in my PSAT/SAT scores (I can no longer remember whether I took the PSAT 2x and the SAT once, or the other way ’round). I took some kind of test prep class, right there at my high school after hours. But I pretty much treated it like a joke, frequently bailing with a friend (aka running with the wrong crowd).

        I think what helped most of all was taking a standardized test repeatedly. That and maybe “pick C if you have to guess.”

        • GeorgeBurnsWasRight

          For amusement, in my senior year of college I took a test for Hebrew, a language I know absolutely nothing about. On the parts that were in English I managed to get 50% right because 16 straight years of taking tests, when random guessing would have only given me 25% right.

          Taking tests is just another skill that can be learned by most people if they put out the effort.

      • Dr. Ronnie James, DO

        At least for medicine – related tests (MCAT, boards), Kaplan’s program was basically “higher test scores guaranteed if you follow our program completely.” The program, unfortunately, consists of roughly 10,000 unwatchably (dare i say deliberately) bad videos that you have to watch every single one of in order to qualify for the guarantee. So almost noone ever qualifies.

        [ Full disclosure: I took Kaplan voluntarily for the MCAT and was provided with Kaplan involuntarily by my medical school for the first level of boards. I then used other programs for my later boards and found that they worked much, much better].

    • Dennis Orphen

      Winning money in poker games and residual checks from WBKotter could be a decent living.

    • vic rattlehead

      I used Kaplan for the New York and New Jersey bar exams (the latter being much easier though). Manages to pass the first time around. So, I’d say I got what I paid for.

  • Fundraising? What are they gonna do, have bake sales? It’s for profit, how are they gonna fundraise?

    Oh wait — I see they plan to convert it to a non-profit. But I can’t see anybody buying that and giving them donations, it’s an obvious scam.

  • NewishLawyer

    Wait, can a public university acquire a for-profit company?

    Also, why does Washington Post/Bezos want to sell Kaplan?

    • Warren Terra

      The Grahams sold the Washington Post to Bezos and retained Kaplan, Slate, and I think some other assets.

      We probably dodged a bullet there. I shudder to think what would happen if Bezos decided to get involved in for-profit education.

      • The Lorax

        God help us. I say that as an educator.

    • Yes, they can make the acquisition but they need to get Kaplan accredited. The Obama administration wouldn’t do that but presumably the Orange Julius admin will. See the WaPo article.

      • GeorgeBurnsWasRight

        The Obama administration wouldn’t do that but presumably the Orange Julius admin will.

        I expect to see formal price lists from the Trump gang by the end of the year.

    • wjts

      Based on my (limited and very possibly incorrect) understanding, I don’t see why not. Would it be any different than acquiring another revenue-generating asset like, say, rental properties?

      • N__B

        Would it be any different than acquiring another revenue-generating asset like, say,

        semiprofessional sports teams?

        • randy khan

          Well, mostly those are not-for-profit, if not intentionally.

          • PunditusMaximus

            Uh…

      • Mellano

        Does Kaplan qualify as an unrelated business for purposes of UBIT? It’s not like they’re educating anyone.

    • Unemployed_Northeastern

      A public university can CREATE a for-profit corporation. That’s what SNHU did with the tech platform from which it hosts its online classes (SNHU itself remains non-profit).

  • Warren Terra

    There’s an aspect you don’t mention in your post: Kaplan and some of its peers were driven out of business by an Obama administration crackdown on abusive for-profit colleges and vocational educators, that were soaking up tuition including federally backed loans and veterans’ benefits, but were rarely providing degrees, and at that the degrees were worthless in the marketplace. This was an important move, but it was I think entirely administrative: Congress repeatedly quashed efforts to enshrine it in law. Now we’ve got a new administration, and they’ve signaled very strongly that they disagree with those actions by the Obama administration. The salad days are back for abusive quondam educators, and it’s open season on the suckers looking for a degree and a job.

    So, it’s not a bad time to snap up any distressed for-profit college scams and relaunch them …

  • Ahenobarbus

    My 8th grade French teacher told us that we could remember that perdu means lost because Purdue always loses.

    • Hogan

      À la recherche du temps Northwestern.

      • wjts

        La Cité des Enfants de Pauw.

  • dcoffin

    I live in Indiana, and this comes as a complete surprise to me. There has been no discussion of this (publicly, at any rate) that involved the state legislature or the Indiana Commission on Higher Education. I don’t see how it’s possible for a state agency (Purdue) to enter into an agreement to pay what could be large ongoing sums to an outside, for profit corporation without legislative and regulatory approval. Yet in the WaPo story, there is not one word about that. Every hit in my google search returns links to articles published today.”

    And the financing mechanism is strange, to say the least. From the WaPo story: “The state university will pay $1 upfront and enter into an agreement with an affiliate of Graham Holdings Company, the parent of Kaplan Inc. and Kaplan University, that could yield the company 12.5 percent of the new university’s revenue.” This almost sounds like a licensing agreement rather than a purchase.

    Not that Mitch Daniels doing this surprises me. That he did it apparently without covering himself does.

    • Warren Terra

      If Indiana University is putting no money down, getting no ownership, and taking a moderate cut of the revenue, it looks like IU isn’t buying Kaplan University, but rather is renting their name, accreditation, and (maybe) some oversight and services to Kaplan. Which makes a lot of sense for both of them: Kaplan needs a new veneer and a fresh start as it reboots its sucker-fleecing, life-destroying business model, and IA gets a little money.

      I assume this is why you haven’t heard anything about Legislative approval: IA isn’t spending any money (quite the reverse) and so doesn’t need the Legislature’s approval, same as they wouldn’t need any legislative approval to turn the dormitories into sweatshops or sell the books out of the libraries for use as firewood.

      • Paul Campos

        I’m disappointed that people aren’t seeing the synergistic proactivities here, in which a nimble thinkfluencer disrupts traditional revenue modalities via gusts of entrepreneurial disruption.

        Also I bet a lot of Kaplan’s students are minorities which makes you all a bunch of racists.

        • Say, maybe Kaplan University should open a law school!!!

          • Paul Campos

            They already have one: They acquired Concord a few years ago. (As of now the ABA doesn’t accredit on-line law schools, but grads are eligible to take the California bar).

            • Dennis Orphen

              I’ve always wanted to be a ‘reading the law’ ‘country courthouse lawyer’ and I live in CA. Hmmmm….good to know.

            • Unemployed_Northeastern

              Given that the ex-dean of Concord currently heads the ABA Section on Legal Education, though…

        • dcoffin

          Brilliant.

        • PunditusMaximus

          Have you considered writing for the NYT?

        • The Lorax

          That is some genius parody, Paul

      • dcoffin

        Warren–that’s Purdue, not IU, a minor point.

        But the “purchase” apparently obligates Purdue to send potentially large sums of money to the holding company annually. The legislature controls the budget (and the fact that this is arguably not a purchase may be one reason it’s structured as it is), and I think it’s odd that Purdue thought this subterfuge would fly. And the Indiana Commission on Higher Education apparently does have to approve this scheme.

        I suppose it’s worth mentioning that, as Governor, Mitch pushed (and got through the legislature) a hookup with Western Governor’s University, which he sold to the lege as the stat’s move into online, and a justification for IU and Purdue being allowed only a small digital footprint.

  • wca

    But I think we all know that under Daniels’ leadership, what this is going to do is bring public education closer to the for-profit, online model, much to the damage of the poor students forced into this “courses.”

    Purdue, of course, isn’t the only university dipping various appendages into the “worthless online degree” cesspool. They’re just being obvious about it by buying into Kaplan.

    Saw recently a MS degree in biology from a school you all have heard of – at least if you follow college sports. Offered entirely online. No laboratory component … at all. Coursework’s largely a joke as well (I’ve seen samples). What to do about stuff like that, though? Academic administration loves it.

    • Redwood Rhiadra

      Yep. My mother keeps pushing me to get a Masters online. I’m like, “Mom, those are all scams and the resulting degrees are worthless, no matter who’s name is on them.”

  • PunditusMaximus

    If and when I end up in public service, I’m going to literally carry a weather balloon that says “No More Republican Daddies” to every function.

  • Unemployed_Northeastern

    I am shocked that in the state that also houses Lumina, the Sallie Mae-founded and funded enterprise that wants everyone to go to college, especially the lower classes (hmm…), that Purdue bought a major online, for-profit university. Their explicit goal is to get 60% of American adults college degrees.

    Oh, and back in 2015 Gov. Daniels started the Purdue-Gallup Index to metric-ify how well college students do and recommend reliably neoliberal measures to help them. Guess what? Funded by Lumina.

    Many other ties between Lumina and Indiana and Purdue officials, too; give this a read. Although the link itself basically spells it out.

    http://www.schoolsmatter.info/2014/01/the-daniels-lumina-alec-sallie-mae.html

  • Colin Day

    When all you have is a hammer, everything looks like a nail possible acquisition.

  • USC and Simmons College (Boston) have been partnering with a for-profit tech company (U2) for years now to deliver their all-online MSW (social work) programs as well as other offerings – not the same as this, I know, but certainly a “creep.” I am one of about 2,000 ‘adjunct’ instructors who teach online for one of these programs, and there’s certainly a “for profit” feel to the recruitment side (tuition at USC is $65K/year and about $50K at Simmons for a 2-year FT program), but the technology is superb – and this was the only way I could obtain this experience as my campus where I’m an Associate Professor doesn’t offer all-online courses. Despite this quality issue, I find it odd …

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