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If the Purdue-Kaplan Deal Is So Bad, How Can We Stop It? Part 1

Well, kids, it looks like another #resistance moment is upon us, and since no one is exhausted yet from all the other #resistance moments we’ve encountered in the past 102 days, and since we’re dealing with rational people with good and loving hearts instead of narcissists and ideologues, this should be a piece of cake, right?

Haha, I jest.

But for what it’s worth, the deal is not a done deal; from the SEC filing:

Consummation of the transactions contemplated by the Transfer Agreement, if entered into, would be subject to various closing conditions, including, among others, regulatory approvals from the U.S. Department of Education, the Indiana Commission for Higher Education and HLC, which is the regional accreditor of both Purdue and Kaplan University, and certain other state educational agencies and accreditors of programs.  Kaplan is unable to predict with certainty when and if such approvals will be obtained; however, it expects that all approvals will not be received until the fourth quarter of 2017.  If the transaction is not consummated by April 30, 2018, either party may terminate the Transfer Agreement.

You can learn more about ways the deal can be terminated in section 9 of the Contribution and Transfer Agreement (CTA), but basically, in terms of where to #resist, the people in charge of education have to agree. I will devote a blog post to each of these three entities that must support the Purdue-Kaplan deal, starting today with the Higher Learning Commission.

HLC, the Higher Learning Commission: This is the accrediting body for both Purdue and the current Kaplan University, which might make it seem unlikely that HLC would interfere with the deal, but just last year, this body blocked Grand Canyon University’s bid to convert from a for-profit to a non-profit university. HLC said that part of their rationale for blocking the GCU deal was that their requirements “do not allow for an institution to outsource all or the majority of its basic functions related to academic and student support services and curriculum development, even where the contract between the parties indicates that the accredited institution provides oversight of those services.” My reading of the Purdue-Kaplan deal documentation suggests that they are attempting to do something similar to what HLC has already objected to:

From the CTA: “NewU to acquire the accredited, Title IV-participating, post-secondary ED Institution known as “Kaplan University” and its institutional assets and operations for the purpose of delivering a broad range of educational offerings in support of the efforts of Purdue.”

SEC filing: “Under the TOSA, Kaplan will provide operations support activities to New University including, but not limited to, technology support, help-desk functions, human resources support for transferred faculty and employees, admissions support, financial aid administration, marketing and advertising, back-office business functions, international student recruiting and certain test preparation services.”

This is confusing, because of the fact that “Kaplan” and “Kaplan University” are distinct entities. “Kaplan” is the continuing for-profit business that will continue to run the Kaplan test-prep services and the Kaplan University School of Professional and Continuing Education (KU-PACE), an educational arm of the business that is still profitable and thus isn’t part of the deal with Purdue. “Kaplan University” is the seven schools and colleges that now comprise Kaplan University (not including KU-PACE) that will become New University.

So the “Kaplan” that will “provide operations support activities” is the continuing for-profit business, not New U, which will become, in the words of the HLC’s objection to the GCU deal, “the accredited institution [that] provides oversight of those services.” And just having the accredited, non-profit institution overseeing the support work of a for-profit company wasn’t good enough for the HLC a year ago. I’m sure that the lawyers for Purdue and Kaplan are very sympathetic with Grand Canyon’s take on the HLC decision; certainly they have tried to distinguish their deal from the GCU case, but the fundamental problem that HLC objected to is still part of the Purdue-Kaplan deal.

Also see The Purdue-Kaplan Deal Is Bad for Everyone (Spoiler: It’s Not Bad for Absolutely Everyone!)

The Purdue-Kaplan Deal Is Bad for Indiana

If the Purdue-Kaplan Deal Is So Bad, How Can We Stop It? Part 2

5 Replies to “If the Purdue-Kaplan Deal Is So Bad, How Can We Stop It? Part 1”

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