Dive Brief:

• Purdue University has plans to purchase for-profit provider Kaplan University, according to a Securities Exchange Commission filing by Kaplan parent company Graham Holdings Company made Thursday morning. 
• Kaplan will become New University, a public Indiana university affiliated with Purdue, according to reporting by The Chronicle of Higher Education. 
• New University will maintain a separate accreditation and its own administration, and current students and faculty are expected to be retained by the new institution according to the original filing. 

Dive Insight:

It has been noted by early observers on Twitter that the amount of money Purdue is paying to acquire the institutional assets of Kaplan are nominal, and the deal allows that Kaplan will, in exchange, get a 30-year management contract "to provide key non-academic operations support to New University," including "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."

But one key provision states Kaplan cannot be paid anything until all costs are covered for New University, and for the first five years, until after an additional $10 million is set aside. If New University is unable to meet those costs, Kaplan must front the money. Once all costs and mandatory set-asides are met, Kaplan stands to be reimbursed for the cost of its services and receive an additional 12.5% of New University's revenue.

The bet is an interesting one for Kaplan, which saw a more than 30% decline in revenue in the first six months of 2016, as well as for Purdue. But with Kaplan standing to gain a reasonable amount of money from the success of New University, there is sufficient motivation to invest the same marketing and technology support which have traditionally been strengths of the for-profit sector. And maintaining the campuses and their online slates of courses targeted for adult learners will mean the potential for increased flexibility for all learners in Indiana, without the risk often associated with for-profit enrollment.