Are you chatting with your campus colleagues about the big Purdue / Kaplan news? (See Purdue's Bold Move).
My guess is that reactions from folks who work at smaller schools will fall into 1 of 3 categories:
Category 1: Interesting - but probably not that big a deal for us.
Category 2: Interesting - and important for us to understand and discuss.
Category 3: Not only not interesting - but another example of the blurring line between the non-profit mission of higher education, and the growing corporate and market-based thinking that ruining this country.
(Okay - I might be overstating things some with category 3, but you get the point).
So how are your conversations going?
My argument is that the best answer is category #2 - that whatever type of institution that you are a part of (and especially if you have a leadership role) - that Purdue buying Kaplan’s online education business is an event worth thinking and talking about.
Even if you end up believing category #3, (I don’t, but you might), then a discussion to test out your beliefs would be worthwhile. (And maybe you could even convince me).
Before we get too deep into this, let’s make sure that we are all on the same page about the deal.
What we know is that Purdue University is buying Kaplan’s online university business - renaming it New University - which will then be a public institution that will offer Purdue degrees.
This new university, which will focus on providing online degrees for working adults, will consist of over 100 programs (certificate, associate, bachelor, masters and doctoral degrees), serving approximately 32,000 students. These students are currently served by about 3,000 Kaplan employees (including some full-time and many adjunct faculty), who will now transfer to New University.
In exchange for getting Kaplan’s online students, and all the courses and course materials that have been developed for the online classes, Purdue is paying Graham Holdings (the owner of Kaplan) $1. The for-profit Kaplan will make money on the deal through a 30 year revenue sharing agreement - similar to a traditional OPM (online program management) deal.
Services that Kaplan will provide, and be paid for out of tuition revenues, include: "technology support, help-desk functions, human resources support for transferred faculty and employees, admissions support, financial aid administration, marketing and advertising, back-office business functions, international student recruiting and certain test preparation services.”
The deal guarantees that Purdue (New University) will get at least $10 million in revenue per year on top of direct costs. Once that is met, Kaplan gets reimbursed for the direct costs of providing all the student life-cycle and technology/platform services, plus 12.5 percent of revenues.
Okay, are we all together on the basics of the deal? What am I leaving out that is critical for our conversation?
We didn’t talk about Purdue’s opt-out clause should things go badly. More importantly, we don’t know exactly what it means that Purdue will have to pay Kaplan’s direct costs for the OPM responsibilities. And it would be great to see the full pro forma for the deal, as I’m curious about revenue and cost projections.
Still - we know enough to talk.
The reason that I think that all of us should pay attention is my belief that all of us should be paying attention to online learning.
This move by Purdue is all about scale. Purdue knows that it needs to be in the online learning learning space if it is going to align the institution with its mission of workforce development and its commitment to serve as an engine of economic and social mobility. This agreement enables Purdue to scale up quickly, while minimizing its initial investment and its downside risks.
The way to think about this deal is through the lens of an OPM agreement, as opposed to a traditional acquisition. This seems like a smart move - from what I can see - for both Purdue and Kaplan.
But what about schools where the mission is not about getting to scale?
My recommendation is that is a worthwhile conversation to have to try to understand where online learning aligns (or doesn’t) with your mission.
This is a conversation first about long-term strategic goals and mission, and only second about online learning.
As someone who has spent his career on all aspects of online learning - from teaching to building courses to building programs - I’ll be naturally biased towards the conclusion that online learning can align with mission. That might be my blind spot. But it is worth having that vigorous debate.
From what I have observed over the past couple of decades that I’ve been working in this space - online learning can be a critical catalyst of quality, innovation, and resource creation.
I believe that even small, residentially focused liberal arts institutions can leverage online learning to advance their core mission. This may be through providing opportunities for a more diverse population of students to access the strongest programs and faculty at your school.
Online learning may enable your existing students to move more efficiently through their studies, and to take courses that normally would not be available to them. Through online and low-residency education, small schools can offer premium quality programs (including masters programs), building on institutional strengths as opposed to a desire to scale the number of students.
The most important higher ed outcome of this big Purdue / Kaplan announcement should be conversations.
I very much hope that what’s going on in Indiana spurs lots of passionate, informed, and open-minded conversations across all of our campuses.
How might online learning align with the mission of your (small) college?