Purdue's Mitch Daniels On Kaplan Acquisition

For the first time in the history of higher education, a state university is acquiringa for-profit college.

Purdue University president Mitch Daniels announced last year the university known for its engineering and science programs was acquiring Kaplan University, a for-profit, online college chain owned by the Graham family, the former majority owner of The Washington Post.

Then, earlier this month, a regional accreditor in Indiana approved the deal.

The price? One dollar.

Under the deal, Kaplan will continue to operate its online platform and its 32,000 students will transfer to Purdue Global, a joint, non-profit university run by Purdue and Kaplan online.

The total cost for a bachelor's degree will be $39,000. That's compared to $80,000 on campus.

While many faculty are deeply skeptical, Purdue administrators see this as a move to enroll more adult students.

On Campus Radio recently sat down with Mitch Daniels in his office in West Lafayette.

(Mitch Daniels) Market research tells us [Purdue] is known for academic excellence particularly in the, what are now known as the STEM disciplines, but also for being a place that is resolute about remaining accessible and affordable to students. We have not raise tuition here in five years we won't again next year. Lowered the cost of other things to be less expensive in unadjusted dollars to attend Purdue and 2019 than it was in 2012. Now both those things are highly consistent with a land grant heritage that we never lose sight of. We were put here by Abe Lincoln and his allies to open the doors of higher education beyond the wealthy beyond the privileged and the elites. While we pursue excellence in research and scholarship every day, we are still tightly wedded to that mission of extending the franchise of education. And that's really what the move toward what will now be produced Global is about.

(OCR) Purdue Global will be a combination of Purdue and Kaplan. What do you think Kaplan is known for?

(MD) They are known for bringing higher education to those who missed it the first time. Their typical, or the average student, at what has been Kaplan University is a 33-year-old woman, three-fourths are women, with a family and a job who had some college credit but didn't finish. Life somehow intervened. And helping those working adult learners get to the finish line is a proven way to improve their opportunities in life, their income and the range of jobs that they are qualified for and one of the most important things can happen to the country. Every day's news is about the skills gap, the good jobs that are going unfilled.

(OCR) And you think they’ve done a good job?

(MD) I do think they've done a good job. We spent a lot of time looking at that. Unlike some of their peers they have been willing to be accountable. They have measured, for instance, the income results two years, five years out for their graduates. They've worked hard on trying to help their graduates succeed.

(OCR) How did this acquisition come about? Was this your idea?

(MD) I would say it was a little bit of luck. On our end, we had become, as a university, very conscious of the need as we saw it to extend our land grant mission beyond the traditional college students and to this enormous population of adult learners, or would be learners, in the working adult population. And we had struggled, and I thought made little or no progress in devising online offerings for that population from here, or for any population.

(OCR) Why not? It cost too much?

(MD) It's a little foreign to what has happened on campuses like ours. And there are rules and practices and customs in higher ed that tend to slow things down. And so I had said to a number of people, ‘I don't think we're going to be able to build this capability and if we're going to make a contribution to this important objective we need to find a partner to do it.’

(OCR) Why not partner with a nonprofit like an EdX out of MIT and Harvard?

(MD) Well, we've done a little bit of that.

(OCR) Why not do more of that?

(MD) That would have been the alternative. Don Graham, who at the time was the owner and publisher of The Washington Post and from the family that has such a proud tradition in journalism there, they had decided they needed to exit the proprietary sector, which was under very relentless assault by the federal government. Much of it deserved, but with a pretty broad brush. One person who'd heard me think out loud about this had heard Don think out loud said, ‘Maybe you two should talk.’ That's how it happened.

(OCR) Did you meet here in this office?

(MD) No, he called me up and said ‘This is probably going to be a short conversation. You probably wouldn't go for anything like this.’ I said ‘What do you got in mind?’ Fifteen minutes later we were arranging more serious conversations and five months later we shook hands.

(OCR) How many conversations in those five months?

(MD) Several, but we rather quickly got engaged with their team and our team to see whether we had aligned objectives and how the two entities might come together.

(OCR) Some of your faculty have criticized you for striking a deal behind closed doors without really consulting them. How do you respond to that criticism?

(MD) Number one, it’s not their decision. The trustees of Purdue University unequivocally have the right to decide where we'll have place institutions. When we opened the post-World War II regional campuses there wasn't the faculty vote about that. At each expansion of higher education opportunities, there's been the same criticism: ‘Why, these riffraff don't belong in higher ed. You know, you're cheapening the currency.’ This was said at the dawn of the land grant era. It was said again by some people when the G.I. Bill brought in new opportunities for men who had been off doing something else when they could have would have been in college. Across our campus, broadly, I think there's great excitement about this. We have professors eager to try to offer online courses that might serve this new audience. We have faculty who are eager to offer courses that might use this platform to reach other audiences, perhaps those who already have a bachelor's degree and would like to upgrade it somehow.

(OCR) Kaplan is facing down enrollment. It's facing some debt. Why would a well-respected public research university acquire what many see as a struggling for-profit college?

(MD) We think it has great upside potential. I mean there's no question they were caught in a sector wide downdraft that was very much the product of the hostility of the federal government.

(OCR) But some found them to be predatory. Not as bad as Corinthian and ITT Tech, which got swept up in those regulations and ultimately shut down and left a lot of students in the lurch, but they faced a lot of the same criticism for being predatory, for recruiting students, for not delivering on what they promised.

(MD) And the criticism we found unfounded. We made a very, very careful look. The claims, one after another, that were the charges that were thrown at them turned out to be bogus. They either were not Kaplan University at all or they were inquiries that came to nothing and someone else later asserted was an investigation or something. We found them, by far, the best in that world and we do believe that there's every chance that as a new public institution that they will be able to grow back to something like the size they were and that's our hope and goal.

(OCR) The for-profit college brand overall is pretty toxic right now. Do you worry at all about tarnishing the Purdue brand and the land grant mission?

(MD) No. This is a public institution now, or about to be. We intend to operate it in the standards that, frankly, I think Kaplan has been holding anyway but are consistent with the values and the standards of Purdue. I would just point out to you, as I have others, that the criticisms and the focus on institutions that were not delivering, well I think, was entirely appropriate. The fault I would find with it was that it zoomed in entirely on one category.

(OCR) Indiana ranks near the middle of the pack in terms of higher education funding. Why transfer limited public funding to what really amounts to an educational experiment?

(MD) There won't be any public funding.

(OCR) No Indiana taxpayer dollars, but federal taxpayer dollars will go into this.

(MD) Well federal taxpayer dollars that lead to somebody getting a college degree, I think we all believe, are one of the best uses of public funds. The test here will be are success rates high? And and are the graduates who leave with these new credentials doing better years later than they were without them?

(OCR) Will your main campus here in West Lafayette accept the credits from this co-branded Purdue Global operation?

(MD) It could be, but this is very, very unlikely.

(OCR) Why not?

(MD) Because people keep overlooking the fact that this is an entirely new population completely different from the one we serve here or even at our regional campuses. We will set up the mechanisms for that. The whole point of doing this is that the students of Kaplan University, soon to be Purdue Global, have no option to come to a place like West Lafayette. If there was ever a possibility for them it’s years in the past.

(OCR) One supporter of the deal told me he sees this as a bold experiment in a severely inert industry and we need more experiments like this across American higher education. Do you think we'll see other public research universities acquire for profit colleges of this is successful?

(MD) I don't know. I do hope we see others, and there are others already of course, reaching out to these enormous populations of Americans who cannot be part of the residential experience at this stage of their lives but deserve a chance at a degree in higher education. Penn State's been active here for a long time. Maryland, Arizona State more recently. If we could have built it here we would have. We proved, I thought, incapable or would have taken forever. When we saw an opportunity to get there more directly we seized it. A veteran of this area who has built enormously successful, mainly out of the country, online institutions, came by, applauded what we were doing, and when I said ‘We were taking a risk, we understand. I hope it will work,’ he said, ‘You were 15 years behind, you caught up in one day.’ I hope that we can prove him right.