ROBERT SIEGEL, HOST:
Let's look now at a move that's being called in education circles bold and even out of the blue. Indiana's Purdue University has bought the for-profit Kaplan University for $1. In his announcement last week, Purdue President Mitch Daniels said it was designed to open the university up to a vast new pool of underserved students nationwide.
(SOUNDBITE OF ARCHIVED RECORDING)
MITCH DANIELS: A 34-year-old single mom who's working and trying to take care of kids at the same time will never come to this campus and will be left behind if we don't have something very different but also of very, very high quality.
SIEGEL: But the deal is raising a number of questions, and for more, we turn to the NPR Ed team's Anya Kamenetz. And, Anya, what is the deal here? What has Purdue acquired for a dollar?
ANYA KAMENETZ, BYLINE: Essentially Kaplan Inc., which consists of test prep and international as well as the university, they are handing over Kaplan University to Purdue. That's over - a little over a third of its business. And then Kaplan Inc. will continue to provide back-office services to Purdue to run over a hundred online programs, 32,000 students currently. And in reality, these back-office services are actually pretty extensive. So it includes the marketing, the recruitment, student financial aid, student advising, as well as human resources and the technology platform itself.
Purdue is assuming control of the academic side of things and creating a new institution that's being nicknamed New U or New University. And this deal also guarantees Purdue $10 million a year after expenses, or what we might call profit.
SIEGEL: And will students at what is now Kaplan University, will they be getting degrees from Purdue University?
KAMENETZ: That is a major, major outstanding issue. When they announced this, there had - you know, there had been a nondisclosure arrangement and not a lot of public talk about this. But we don't yet know if it's going to be called Purdue University, New U or it's going to be called, you know, New U in association with Purdue. And the value of these degrees and the credibility behind them, the brand value you could say, it's really well - it's really associated with, you know, what they call it and how exactly they couch this.
SIEGEL: Purdue's president, the former governor of Indiana, Mitch Daniels, says this is all about increasing access, modernizing the universities. What kinds of issues are people raising with the deal?
KAMENETZ: Well, I spoke to Robert Shireman. He's a former Department of Ed official under Obama and a critic of the for-profit college industry. And he's examined hundreds of similar agreements between universities and for-profits. And he says that this deal gives Kaplan an unusual degree of control over the bottom line. You know, things like student financial aid can directly affect the quality of education. And Purdue's brand and credibility are really on the line here. You know, Kaplan, of course, has a cleaner reputation than most in the for-profit industry, but still, several years ago, Senate investigators were accusing it of spending more money on marketing and profits than on instruction and of leaving more students in default than with degrees.
SIEGEL: The one Kaplan U course that I saw being taught - and this was actually at one of their campuses - was in medical terminology. I mean, it was teaching the vocabulary of a doctor's office so you could train to do filing there. That doesn't sound to me like a Purdue University course.
KAMENETZ: (Laughter) Well, the hundred-plus programs that Purdue just acquired ranged from certificates all the way to doctoral degrees. And Purdue is assuming responsibility for the academic side of things. So presumably there's going to be some upgrades, but I think that Daniels has been very vocal about the idea of higher ed needing to respond to market forces. So, you know, if we need more medical filing clerks, then that's what the university's going to get into.
SIEGEL: Anya Kamenetz of the NPR Ed team, thanks.
KAMENETZ: Thanks, Robert.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.