In April, the for-profit Kaplan University officially became an arm of Indiana’s public university system. With its new home and new name, Purdue University Global is the first public university to share control with a for-profit company answerable to investors. When the deal was announced last year, Purdue’s president said that critics of for-profit colleges “should be happy” that Purdue was turning Kaplan into a public rather than for-profit institution. Critics, however, wondered whether the for-profit company’s large ongoing role meant, instead, that Kaplan’s history of predatory practices would simply re-emerge under a “public” moniker.
One answer to that question arrived last week, when Purdue faculty members revealed that the online school is requiring instructors to sign a four-page nondisclosure agreement. The pledge, required for Purdue Global employees, prohibits professors and staff from discussing anything they know about the university’s operations with anyone else, including their colleagues (unless those people already have access to the information). Officials at the American Association of University Professors (AAUP) describe the pledge as “unprecedented for a public, non-profit university” and “breathtakingly inappropriate in higher education.”
Now, The Century Foundation has new documents showing that predatory practices at Purdue Global were baked into the plan from the very beginning.
Through a public records request to the U.S. Department of Education, TCF has obtained new details from critical portions of Purdue University’s original contract with Kaplan University—including a so-called “Policy Guide”—which Purdue officials have thus far refused to release. This Policy Guide and related documents, which TCF is releasing for the first time today, reveal myriad ways in which Purdue Global is designed to operate more like a for-profit private college beholden to investors than like the nonprofit public institution it purports to be.
Here are five of the most shocking concessions that Purdue officials made to Kaplan executives in their initial contract. Because the contract was finalized in 2017, before a name was chosen for Purdue’s rebrand of Kaplan’s online programs, the contract uses a temporary name “New University” or “NewU” to refer to the online school.
1. Purdue agreed to deny students’ legal rights.
Purdue Global is committing new students to forced arbitration in the case of any disputes, and preventing students or former students from joining forces with any complaints. In a 2016 study, TCF found that clauses restricting students’ rights are a common feature of enrollment contracts at for-profit colleges, but rare at nonprofit schools and virtually nonexistent at public universities.
The “Policy Guide” negotiated between Kaplan and Purdue describes Arbitration Agreements as “critical documentation NewU students receive and are required to agree to, or acknowledge of [sic], as part of NewU’s enrollment process.” Under scrutiny, some for-profit colleges, such as DeVry University and the University of Phoenix, voluntarily agreed to abandon the use of forced arbitration. But Purdue is going in the opposite direction—becoming perhaps the first and only public institution to strip students of their legal rights.
But Purdue is going in the opposite direction—becoming perhaps the first and only public institution to strip students of their legal rights.
The Century Foundation obtained a copy of Purdue Global’s Arbitration Agreement. Just like Kaplan, Purdue Global requires students to “agree to arbitrate all disputes, controversies, and claims.” But Purdue Global goes much further in restricting students’ rights: whereas Kaplan’s Online Programs Enrollment Agreement contained just one clause regarding forced arbitration, Purdue Global lists thirteen clauses. Additional restrictions require students to “waive the right to a jury trial,” place an explicit ban on class actions, and apply forced arbitration even to cases of fraud or misrepresentation “relating to advertising or other solicitations to enroll at Purdue Global.”
In our letter to Purdue Global’s accreditors, TCF criticized Purdue leadership for claiming that Kaplan had never been sued by students. At the time of that boast, not only did Purdue leadership know that Kaplan used fine print to prevent students from suing, but Purdue had already knowingly agreed to continue those same practices at Purdue Global. No wonder they tried to hide these documents.
In response to our letter, Purdue representatives wrote that “Kaplan University has . . . arguably the best student protections in the industry.” However, forced arbitration doesn’t protect students—rather, it protects institutions from accountability while silencing student complaints.
2. Purdue agreed to lock in high spending on marketing and recruiting.
Purdue could be subject to penalty fees “If, for any Fiscal Year, New University adopts a New University Budget that includes amounts for Outreach and Media and Admissions line items that are less than the Target Outreach and Admissions Spend (or ultimately spends less than contemplated by the Target Outreach and Admissions Spend).”
Kaplan was found in the past to be engaged in aggressive, deceptive, and emotionally manipulative tactics. Admissions counselors were incentivized to push sales, and threatened with termination if they didn’t hit enrollment targets. Kaplan trained recruiters to make misleading statements about job prospects and push pain points.
While Purdue claims that recruitment abuses are all in the past, its aggressive maneuvers to prevent students from pursuing complaints and seeking remedies strongly suggest that recruiters will be operating dangerously close to legal lines. And with a large marketing budget all but guaranteed, Purdue Global will be recruiting on a significant scale.
3. Purdue agreed to keep prospective students in the dark about their options.
For-profit colleges are so profitable, and end up with so many dissatisfied customers, because they railroad students during the recruitment process. At public and nonprofit colleges the enrollment process is less pressured, and it is common for admissions personnel to tell prospects that the college may not be right for them.
But telling students the truth does not always maximize profits, especially when the truth isn’t pretty. For example, a policy to clearly disclose when a school lacks key accreditations (like Purdue Global’s online law school, which lacks the ABA-accreditation required by forty-nine states for future attorneys) may dissuade potential students from enrolling. Likewise, a policy to act in the best interest of potential students could get in the way of investors’ interests. Policies like these would benefit students. But the secret portion of Purdue’s contract with Kaplan, stymies any policies that could “encumber . . . the enrollment process” or “negatively impact enrollment growth.”
4. Purdue agreed to lock in Kaplan’s low admissions standards.
In response to faculty concerns that academic decisions at a public university have been placed in the hands of a for-profit company, Purdue officials have insisted, again and again, that the decision-making authority rests with the Purdue-appointed trustees. Yet on one of the most basic academic issues, the standard for admissions, the secret portion of the contract gives Kaplan the right to veto any decisions by Purdue to “mak[e] admissions standard [sic] more difficult to attain.” Furthermore, Kaplan representatives could contest any changes to program offerings “that could negatively impact a student’s ability to enter into or remain in [Purdue Global’s] programs.”
Purdue faculty were onto something when they expressed concern that the agreement with Kaplan “would effectively allow GHC [Kaplan’s parent company] to block any and perhaps all actions on the part of faculty with regard to proposing or making changes to academic programs.” Purdue faculty would not be able to change admissions standards, program offerings or other key aspects of academic programs without consent from Kaplan’s investors.
5. Purdue agreed to keep tuition high.
For-profit institutions are notorious for basing their tuition prices not on what they need to run the institution, but on the amount that causes students to max out their federal student loans. Yet Purdue accepted Kaplan’s tuition charges as sacred, agreeing that reductions, no matter what the justification, would be considered a hit on Kaplan’s profits and subject to the company’s veto. Moreover, Purdue could be on the hook for the total revenues “lost” to Kaplan if Purdue Global lowered tuition. This provision creates a one-way ratchet: no penalties if tuition goes up; Purdue is fined if tuition goes down. An odd formula for a school meant to “provide greater access to affordable” education.
Purdue Global Is Revealed as Another Covert For-Profit College
Purdue did not want these details to come out: The Century Foundation originally requested these documents in May 2017. At that time, Purdue refused to release these documents, saying that they were all “trade secrets.” Purdue Global obtained a legislative exemption from the Indiana open records laws, which apply to all other parts of Purdue; furthermore, the company sought and received an exemption from the state’s open meeting and audit laws.
These new documents, together with the revelation last week of an unusually restrictive faculty gag clause, show that Purdue Global is attempting to hide the details about this “public” university from public scrutiny. Why? Because it’s covertly operating like a for-profit college even as it markets itself as part of a respected public university.