Purdue Global's Financial Woes: A Troubling $71 Million Loss and Counting. But Can It Turn Things Around?
The Story So Far:
In 2017, Purdue University made a bold move to expand its online presence by acquiring Kaplan University for a mere $1. This deal created Purdue University Global, but the journey since has been fraught with financial challenges.
The Struggle for Profitability:
Despite its ambitious start, Purdue Global has faced significant financial hurdles. The online university has accumulated a staggering net financial position of -$35 million, even with recent improvements. The reasons behind this loss are multifaceted.
Heavy Spending, Limited Transparency:
Purdue Global's expenses are substantial. It allocates a significant portion of its budget to marketing, aiming to attract students. However, this spending has not translated into substantial enrollment growth. The university also pays substantial fees to Kaplan, which manages the non-academic aspects of the school. These fees, along with other expenses, have contributed to the financial deficit.
A Controversial Legal Status:
Adding to the complexity, Purdue Global operates as a public benefit corporation, exempt from Indiana's public records laws. This legal status limits financial transparency, making it challenging for the public to scrutinize the university's financial decisions and performance.
A History of Controversy:
Kaplan University, now Purdue Global, has a controversial past. It was part of a group of for-profit online schools that faced criticism for prioritizing profits over student well-being. A 2012 U.S. Senate report revealed aggressive student recruitment practices, which led to increased regulation and damaged reputations.
The Acquisition and Its Promises:
Purdue's acquisition of Kaplan was intended to boost its online presence and create a new revenue stream. The university's leadership, including then-President Mitch Daniels, believed in the deal's financial soundness and the potential to attract nontraditional students.
Unfulfilled Expectations:
However, the reality has fallen short of these expectations. Purdue Global has struggled to compete with established online non-profit institutions, resulting in losses of $83 million in its first three years. Enrollment gains have been modest, and while finances are improving, the net financial position remains negative.
The Cost of the Deal:
The acquisition's financial burden is significant. Purdue Global owes Kaplan $239 million in fees, which have increased over time. This arrangement, where Purdue Global pays its previous owner for non-academic services, has been likened to a loan.
Lack of Transparency:
The university's financial dealings are shrouded in secrecy due to its legal status. This lack of transparency raises concerns about accountability and the ability to address underlying issues.
The Push for Growth:
Purdue Global has been a top priority for the university's leadership, with goals set for enrollment and financial success. However, these goals have been vague and, in some cases, unmet. The university's chancellor, Frank Dooley, emphasized the focus on increasing graduation rates, but the financial challenges persist.
The Road Ahead:
Purdue Global's future remains uncertain. The university's leadership aims for ambitious enrollment targets, but achieving them may require continued heavy spending and discounts. The lack of differentiation from established peers poses a significant challenge.
The Transparency Question:
The limited financial transparency is a critical issue. As a public entity, Purdue Global's financial dealings should be open to scrutiny. The public has a right to understand how taxpayer money is being spent and whether the university is fulfilling its educational mission.
Controversy and Discussion:
The acquisition of Kaplan and the subsequent financial struggles of Purdue Global raise important questions. Is the university's financial health sustainable? Should public benefit corporations be held to higher standards of transparency? How can Purdue Global differentiate itself in a competitive market?
What do you think? Is Purdue Global's financial future secure, or are there underlying issues that need addressing? Share your thoughts and join the conversation.
