Purdue University buys for-profit Kaplan U

AP Photo/Doug McSchooler

Purdue University has agreed to acquire Kaplan University, the for-profit higher education business of Kaplan Inc., which is owned by Graham Holdings Co. The upfront cost is just a symbolic dollar, but Purdue would continue to operate Kaplan U's online programs and 15 physical campuses and learning centers (around 32k total students) for at least five years at a cost of $10 million per year. Then there are a bunch of additional reimbursement machinations, with Purdue saying no state funds will be used.

Why it matters: Public universities aren't usually on the M&A buy-side, let alone of large for-profit companies that they want to convert into nonprofits. This also has the potential to shakeup the flailing online education market.

Bottom line: "Like most large for-profits, Kaplan University has lost students and revenue in recent years. The sector faces rising competition from nonprofits and a stigma due to high-profile investigations and lawsuits over some companies' misleading of students." ― Paul Fain & Rick Seltzer