Kaplan University goes non-profit in Purdue takeover

A for-profit online university will be converted into a “non-profit, public-benefit” organisation under the terms of its acquisition by a US public university.

Kaplan University – which is owned by Kaplan Inc, a subsidiary of the Graham Holdings Company – is to be purchased by Purdue University, a statement from the Indiana-based institution confirmed on 27 April.

Under the sale’s conditions, Purdue University will take on Kaplan University’s 32,000 students, 3,000 staff and 15 campuses and learning centres. KU will become a new non-profit university, connected to Purdue and bearing a version of its name.

A corporate filing by Graham Holdings Company stated that the transfer of assets would create a “new, non-profit, public-benefit corporation affiliated with Purdue…[which] will operate as a new Indiana public university…focused on expanding access to education for non-traditional adult learners”.

Mitch Daniels, Purdue’s president, said that KU's expertise in delivering online education had been attractive.

“None of us knows how fast or in what direction online higher education will evolve, but we know that its role will grow, and we intend that Purdue be positioned to be a leader as that happens,” he said. “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.”

The new institution, which will consist of the seven schools and colleges comprising KU – save for the School of Professional and Continuing Education – will have its own institutional accreditation and will be governed by its own board of trustees, which will “fully control” its functions. Purdue, which will appoint the members to the board of trustees, will provide “key non-academic operations support” to the new university for an initial 30 years, with a buyout option after six years.

“The new university will be distinct from others in the Purdue system, relying only on tuition and fundraising to cover operating expenses,” according to a statement from the university. “No state appropriations will be utilised. It will operate primarily online, but has 15 locations across the United States, including an existing facility in Indianapolis, with potential for growth throughout the state.”

The announcement goes against the tide of recent acquisitions involving for-profit providers, with the sector more used to profit-making companies regularly adding institutions to their portfolio. It is also follows suggestions that for-profit higher education might thrive under the presidency of Donald Trump.

“Purdue and Kaplan share the ambition of enabling individuals of all backgrounds to benefit from a high-quality education,” said Andy Rosen, Kaplan’s chairman and chief executive. “Purdue’s tradition of excellence makes it an ideal party to build upon the progress and innovation that Kaplan University has achieved over the past two decades. We’re proud to pass the baton to this esteemed university.”

This is not Purdue’s first move into the online education market. It announced earlier this year that it was to be one of the first US partners for FutureLearn, the social learning platform owned by the Open University.

Kaplan Inc’s operations in the UK, including its higher education pathway programmes, are unaffected by the deal.

john.elmes@timeshighereducation.com