Purdue’s Big Online Move

Mitch Daniels, the president of Purdue University, shocked the world of higher education on April 27 by announcing the public institution has agreed to purchase Kaplan University. Kaplan is a for-profit school that primarily caters to working adults seeking professional degrees online.

It is really more of an invited corporate takeover than a purchase, with only $1 paid to acquire the assets. In return, Graham Holdings, the current owner of Kaplan, will get a long-term contract to provide marketing, student and faculty support, and technology services for a share of the revenue.

On the surface, the schools could not seem more different. Purdue is an elite public Reseach-1 institution whose faculty received more than $400 million last year in external grant funds. Most undergraduates enroll straight out of high school, and the graduate students are among the top in the world. Best known for its engineering and technology programs, notable alumni include Gus Grissom, Neil Armstrong, and Brian Lamb.

Kaplan, Inc is an outgrowth of the test-prep cram schools founded by Stanley Kaplan in 1938. In 2000 they began acquiring the institutions that merged into Kaplan University, which serves most of its 32,000 students online, offering degrees in professional studies geared towards working adults. Most of these students are working through the program to advance in their career, take advantage of military benefits, or make a career change.

The plan is that this new public university will join the Purdue system, operating as a separate self-sustaining unit with no state funds. While the deal still needs to be approved by the state of Indiana, the U.S. Department of Education, and university accreditors, that it was announced this way shows the Purdue Board of Trustees’ confidence they will be given the green light. Still, it is an audacious plan and the risk-to-reward ratio is very high.

Different Schools for Different Fools

So why would Purdue want to acquire a school with a student body and faculty that is so different from their flagship? Well, the cynical response is to say that it’s all about the money. As more jobs require employees to have higher education degrees, there is an increased market for college programs. Elite public institutions like Purdue have not grown fast enough to keep up, which has allowed for-profit schools like Kaplan, DeVry, and the University of Phoenix to attract those students and their tuition instead.

On the other hand, elite status requires exclusivity and high standards. To gain admission to Purdue, a high school graduate needs to be near the top of her class and have excellent SAT or ACT scores. Upon graduation, she can access a network of alumni who will give her extra consideration in job applications because of her Purdue credentials. If you take away the exclusivity or the quality you upset the balance between meritocracy and brand loyalty.

Does graduating from an elite school make you better educated than a graduate of an online program? For students who do take advantage of the brain trust and resources on campus, there is no substitute for the experience of receiving education and mentorship from some of the best scholars in the world. Other schools fill different niches, like liberal arts colleges that tout their close-knit communities and small class sizes as the ideal environment for learning.

On the other hand, many elite individuals will never be alumni of these schools. Perhaps they joined the military out of high school or started in a four-year program, but dropped out because they weren’t ready for the work. Maybe they had different interests or took a job in the trades before deciding they wanted to become a manager or some sort of professional. Many of the most successful graduates of online and for-profit institutions are working full-time jobs, supporting families, and don’t have the option of giving up their career to move to the campus of a traditional university.

Creating a vehicle that provides practical education to the masses is not a new problem. In fact, it is the very problem that Purdue and other land-grant universities were created to solve in the mid-1800s. The Morrill Act of 1862 turned over federal land to the states so proceeds from their sales could be used to establish colleges that focus on agricultural, mechanical, and “practical education” without excluding the liberal arts. Since 1914, land-grant schools have also run the cooperative extension offices in their states to provide agricultural and consumer continuing education, including the 4-H program for youth.

So why are we seeing so many reactions of aghast horror in the academic community with Purdue’s announcement? Some will claim it’s all about elitism, because “snobby” academics have established a pecking order for institutions. However, I don’t think that’s an entirely fair criticism, as there have been many problems with for-profit universities putting business over student needs.

After peaking around 2010, dozens of for-profit institutes have closed campuses, restructured programs, or shut down completely after the government started restricting their eligibility for federally guaranteed student loans (which made students decide to enroll elsewhere). This was arguably a very good thing, since it forced organizations to focus on the programs that were really working to educate their students. Kaplan, in particular, sold off their “Kaplan College” campuses to become “Brightwood College” while keeping the more productive programs in Kaplan University.

But it doesn’t change the fact that there is a real need for flexible, efficient adult education programs. While community colleges and traditional universities have been a big part of that, for-profit institutes have led in experimenting with new educational practices. Their records have been checkered by success and failure but they have at least been innovative, especially with online services.

The Man Behind the Curtain

The driving force behind Purdue’s master plan is the system president, former Indiana governor Mitch Daniels. The Purdue Board of Trustees selected Daniels once he left political office in 2013. Recognizing his desire for innovation is a key part of understanding how Purdue is positioning itself for the future.

Daniels has that rare combination of an elite pedigree with a “common Hoosier” public persona. While he does not have the professorial background of many university presidents, he was Indiana’s 1967 presidential scholar, earned his bachelor’s degree from Princeton University, and then his juris doctorate from Georgetown Law while on the staff of Indiana Sen. Richard Lugar. Daniels’ career bounced between Indianapolis and Washington in both the private and public sectors, eventually leading him to the position of Office of Management and Budget director in the George W. Bush White House.

When he ran for Indiana governor in 2004, Daniels’ campaign crafted the narrative of a local boy returning home. He visited all 92 of Indiana’s counties in his campaign RV and starred in a “reality show” featuring his friendly interactions with Indiana voters, which aired in the paid programming time-slots of late night and weekend infomercials. He even brought his RV to Purdue’s campus and parked it on the Memorial Mall for campaign events, promising students if elected he would improve Indiana’s economy so they would be able to find good jobs upon graduation. (Full disclosure: I was a Purdue student at that time and volunteered at these campaign events.)

At Purdue, Daniels has a record of innovative moves that appeal to students and families. Upon taking office in 2013 he froze tuition rates and the Board of Trustees has not raised them since. He started the “Back a Boiler” plan last year as an alternative to student loans, where students promise to pay a percentage of their earnings for nine years instead of a set amount that could follow them for life.

This fall, Purdue will open a new STEM-focused charter high school in Indianapolis that reaches out to minority students, who are traditionally underrepresented at schools like Purdue. Purdue’s encompassing city of West Lafayette is also changing, as a town-gown committee is working with the county planning commission to redevelop State Street, the main thoroughfare through campus.

It’s not a stretch to say that Daniels has a lot of irons in the fire, and this new project will be the biggest yet. Purdue is coming late to the game, with several of its Big 10 peers already offering robust online programs. Penn State’s World Campus is often at the top of rankings, serving more than 13,000 students. Indiana University Online serves more than 7,000 students in more than 100 programs. The University of Illinois (where I teach online classes) has some of the longest running online masters programs with the College of Education and the School of Information Sciences, delivering classes online since 1996.

The Emerging World of Useful Online Credentials

Of course the new university joining the Purdue system will not be as regimented as these traditional universities. It will probably look a lot more like Southern New Hampshire University, a once-tiny private school that has gained prominence in the past five years by massively expanding its online offerings to now serve 85,000 students. They keep prices down by offering educational materials with as little human interaction as possible, with credits often given for displayed competencies instead of time spent in class.

This is the opposite model how traditional universities promise to mold a student into a critical thinker and qualified practitioner. These ideals emphasize community membership and open engagement with diverse viewpoints as necessary for a universal education. Just ask any Ivy League graduate the value of his degree and you’ll understand the power of that community—shortly before they release the hounds on you, of course.

As governor, Daniels often said he would “never be afraid to steal a good idea” if he saw a policy in another state he thought Indiana should adopt. He undoubtedly brings this philosophy with him to Purdue and hopes that offering different ways of obtaining an education will help the organization prosper. While the new university will remain separate from the flagship in West Lafayette, Purdue will get to develop the curriculum it teaches and bring back lessons learned from developing online learning.

The biggest danger Purdue faces is in attaching their reputation to making this new project succeed. If it fails, it’s not going to sink the university. But it could become a massive waste of time and money if it turns out that a public school being run with no supporting state funds is not a viable platform. It will set back everything else that Daniels is trying to accomplish and surely cost him his job.

It reveals their lofty ambitions that Purdue called this plan the “Morrill Project.” Their hope is to transform the higher education market online the same way the land-grant college system established practical education programs. And make no mistake, if Purdue does succeed in their venture we will see other large public university systems follow suit and form partnerships with companies like Kaplan.

There’s yet another parallel to Purdue’s founding. In 1869, Indiana’s land-grant money very well could have gone to Indiana University in Bloomington or been used to establish an Indiana A&M University in another part of the state. But a businessman named John Purdue promised to contribute much of his fortune if the state built the school in his county, put him on the board, and named it after him. Now we have another businessman with equally ambitious ideas of how to make new kinds of educational institutions serve his community. Let’s see if Mitch Daniels has the same kind of success.

A version of this piece was published in The Federalist on May 12, 2017.

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