Are the Boilermakers Heating Up For-Profit Learning?

May 22, 2017  |  Pat McGovern

Education

Wow! Didn’t see that acquisition coming.  But then again, no one did.  Normally, these kinds of mergers are the domain of finance or technology giants…not a Big Ten university!

What I’m referring to is the move by Purdue to acquire the for-profit giant Kaplan University that was announced on the 27th of April. Note at the writing of this post, the deal hasn’t officially gone through. That said, assuming Mitch Daniels and team can work things out, this deal may have big, long-term benefits for Purdue, and the potential to transform the for-profit education sector in a more profound way than any single government regulation could ever have done.

But, I’m not going to focus on the details of the merger. If you are interested in getting the details, I’ve included links to some excellent articles at the bottom of this post. Instead, I want to focus on the other for-profit schools out there. For them the questions must be: Is this a rising tide that will lift all boats?  Or is this a new competitive hurdle that we will need to overcome?

Either way, this is a seminal moment for the industry, and no doubt the merger will force change to occur. If it isn’t already happening, I can imagine that soon conference rooms at for-profit schools across the country will be filling with team members discussing: What happens next?

I’m not directly involved in those conversations, but if I were, here are the points I would be pushing in those meetings.

What does our brand stand-for?  No…really what does it stand for? Let’s go back 10-12 years, when for-profits stood in stark comparison to their more traditional higher education brethren.  That difference is now disappearing.

MOOCS (massive open online courses) have emerged.  Many traditional colleges and universities have also moved into the online space.  And more and more colleges and universities are focusing on job placement and careers for their students – an area the for-profits had once fenced off as their own.

To add to this challenging situation, it has become increasingly difficult to distinguish one for-profit from another. Ask yourself: Is the education that students are receiving from one of these institutions that much different from another?

In most cases, it’s not. Which means schools will need to focus on their brand. And they can start by answering these questions:

Without a clear point of difference these schools will continue to struggle and will be forced to fight over features and benefits, programs offered, location of their campuses, and of course, price.

Not a good place to be. 

Just like the non-for-profits, the for-profits need to elevate their game and clearly point to what makes them different, then communicate that difference to their world.

How can we do more for our key target audience?  For years, the non-traditional student has been the bread and butter of the for-profits.  This move by Purdue may change that.

As the demographics shift and college-bound students become increasingly older, more ethnically diverse and more first-generation students, other public and private institutions will need to target these students in order to fill their classrooms, thereby putting greater pressure on the for-profits to acquire and retain their customer base.

So, what steps can for-profits take to hold on to this segment?  They should be asking and considering the following points:

If for-profits are going to survive and grow, they will need to do what they can to hold on to this segment.  In some cases, that will mean significant disruption in the operations. At a minimum, it will require a recommitment to serving this demographic, by connecting with them on an emotional, and not just rational, level.  In other words, schools will need to demonstrate they “understand” this segment.

Can we forge new partnerships? Purdue is working on this with Kaplan.  If I were at one of the for-profits, I would be considering striking the same kind of deal with a traditional college or university.  That’s one approach.

The other — partner with an employer.  To an extent, this is being done at a number of schools.  What I’m suggesting is going to a new level in the partnership whereby a degree from a certain program will automatically place students into a job.  Many corporations have or will have serious issues finding employees.  Therefore, this type of relationship could have big benefits for the school as well as the employer.  If it were me, I would be knocking on some doors.

Additionally, there are opportunities with local high schools.  Inform guidance counselors of the programs you offer and how they could benefit students that may not be interested or equipped for a traditional 4-year degree.

Finally, what can be done to lower the cost of tuition? The fact is many of the for-profits are expensive.  The idea of an affordable alternative degree seems to have disappeared.  With a shrinking middle-class and a dramatic reduction in higher ed state funding, lowering tuition rates is a point that needs to be put back on the table for discussion. Granted this issue is the third rail in all of higher education, but within the for-profit space, the school that can take this on could reap big rewards.  And now seems like a good time to address this issue.

With big change comes big opportunity.

This will be an interesting time for the sector. But taking advantage of opportunity will require schools to leave their comfort zone and make some bold moves. That is going to be difficult for an industry that has been battered down for the past eight years.

The possible acquisition of Kaplan by Purdue could change the playing field entirely. And for this sector that means there is no going back to how it once was…and that’s okay because the future could be filled with greater potential for more opportunities than ever before.

What do you think of the acquisition? Is this a smart move for Purdue?  Will it alter the for-profit space?  How do you think others in the for-profit space will pivot given the recent acquisition?  Let me know…

Below is a set of articles discussing the merger.

Purdue Faculty and Students React Warily to Kaplan Deal
Purdue’s Big Bet on Online Education Further Legitimizes the Digital Degree
Purdue’s Bold Move
In Purdue’s New Vision, How ‘Public’ Will Kaplan U. Be?
Purdue acquires for-profit Kaplan University
Purdue Faculty Questions Kaplan Deal

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is VP at BVK

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