Purdue Makes Big Online Play, OKs Kaplan Acquisition

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Purdue President Mitch Daniels says he believes the acquisition of Kaplan University will also benefit Purdue financially. Purdue President Mitch Daniels says he believes the acquisition of Kaplan University will also benefit Purdue financially.

The Purdue University Board of Trustees has approved the acquisition of Kaplan University, an online university with 15 learning centers in seven states. During a special meeting Thursday morning in West Lafayette, President Mitch Daniels said the decision focuses on expanding the university's reach and a realization that Purdue is not currently set up to be a leader in tapping into the "explosive growth" of online higher education. Daniels says there is an "essential" need for adults to receive post-secondary degrees and reaching those that have not started or not completed a degree is part of its mission as a land-grant institution.

Daniels says Purdue "has been basically a spectator" in online education and has to catch up. "We will become a 21st Century land grant school by doing this. We'll be well-positioned for an online future whatever speed it comes, whatever direction it takes. We will have a available to our faculty here and to our regional partners one of the finest online infrastructures in the marketplace today."

Purdue says the new, "almost exclusively online" university will operate independently of others in the Purdue system, which also includes the main campus in West Lafayette and the regional Purdue Northwest and IPFW campuses. "We needed a third level of Purdue for the third century," Daniels said. Purdue says the yet-to-be-named institution will be funded through tuition and fundraising and not use state dollars. Daniels says details including branding and level of academic rigor for the future of the online university will be announced later.

Daniels says "none of us knows how fast or in what direction online higher education will evolve, but we know its role will grow, and we intend that Purdue be positioned to be a leader as that happens. 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. Today's agreement moves us from a standing start to a leading position."

The acquisition must still receive additional approvals and Daniels expects the new school to officially launch in November. Purdue says all 32,000 Kaplan students and 3,000 employees will transition to the new university.

The new school was unanimously approved by the Board of Trustees. The online university still needs approval from the Indiana Commission for Higher Education and the national accreditation body, the Higher Learning Commission. Purdue's acquisition costs will be $1 up-front and then it will pay Kaplan parent Graham Holdings Co. (NYSE: GHC) a percentage of revenue through the life of the 30-year service agreement. You can connect to more about the contract through Graham Holdings' filing with the U.S. Securities and Exchange Commission. During his presentation to the board, Daniels said he believes the acquisition will be "very financially positive" for Purdue.

You can connect to more about the announcement by clicking here.

Daniels says Purdue "has been basically a spectator" in online education and has to catch up.
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