Why Donald Graham Sold Kaplan University to Purdue for $1

There are many unanswered questions about the unprecedented sale of Kaplan University, a for-profit institution with several online programs but falling enrollments, to Purdue University, one of the top public universities in the nation. To try to get some answers, EdSurge recently sat down with Donald Graham, chairman of Graham Holdings Company, the group that sold the 15-campus Kaplan University to Purdue (for just $1). (Editor’s note, Graham Holdings is an investor in EdSurge.) A look at some details of the deal revealed in an SEC filing suggest that Graham Holdings bears the bulk of the financial risk, and as one analyst notes, is potentially leaving money on the table. It hands off much of Kaplan University to Purdue in exchange for essentially a long-term business contract for Kaplan, Inc. (which remains in Graham Holdings). Under the agreement, Kaplan will provide technology, marketing, and other support services for the new campus of Purdue that will be formed from the former for-profit. And Purdue has the option of canceling that deal after six years (through a “buy-out”) if it feels that Kaplan’s services aren’t working out. Graham, a former publisher of The Washington Post, knows how to skirt a journalist’s question, and even after half an hour of talking, I’m not sure he fully revealed the reasons for the sale. The reason he sold appears to boil down to his belief in the quality of Kaplan University (he even co-teaches a course for its business school) and his hope that making it part of Purdue will elevate its reputation and success in ways it could never achieve as a for-profit university.