Interesting activity at the for-profit/non-profit interface: Kaplan

Conventional wisdom might suggest that for-profit and non-profit higher education institutions have nothing in common, and should stay clear of each other.  However,  there are some quite interesting areas where the two are beginning to work together, leveraging on each other’s strengths.  In fact, the arrangements look suspiciously like outsourcing of modules in the education chain.  Although there are many for-profits collaborating with the non-profits, I will focus on two of the largest for-profit higher education corporations, Kaplan and Laureate.   This post will look at Kaplan, and a subsequent post will consider a very different set of partnerships beginning to be developed by Laureate. 

For-profit Kaplan has its own North-Central-accredited undergraduate and graduate programs in both campus and online modes.  However, in addition, it runs numerous programs in partnership with traditional non-profit institutions of higher education.   One group of these programs is designed for international students whose preparation would not normally gain them admission into the partner institutions, or who feel that they need a transition period of cultural acclimation before entering the partner institutions.  Partnerships of this type are primarily with United Kingdom institutions: Nottingham Trent International College, Sheffield International College, Liverpool International College and Glasgow International College.  Each of these programs is housed on the campus of the partner institution. In each case, Kaplan provides international students with a one-year (two-year in some cases) course that focuses on building key academic skills and appropriate background work, as well as intensive English language instruction as needed.   Upon graduation from this partnership program, the student is guaranteed entry into the regular undergraduate or graduate programs of the partner institution.  For those going into regular undergraduate programs, entry is at either the first- or second-year level, depending on the specifics of the program.

For those programs that only offer first year entry, the universities have outsourced a tool (remedial education) that enables them to increase the preparation of some of their international students.  However, for those programs offering second year entry,  the non-profit partner institution has outsourced a module of their core educational program - the first-year experience for under- prepared international students - to a for-profit higher education provider, Kaplan. Presumably,  these institutions have concluded  that Kaplan can do this particular module better and cheaper than they can.

This latter type of partnership program plays a role similar to, and different from, that which is often offered by community colleges in the US.  Many international students coming to the United States opt to spend their first year or so at a community college before transferring to a 4 year college or university.  In large part, they do so in order to increase their comfort in English language instruction and their familiarity with American life, and to make up any educational deficiencies that might prevent their entry into their desired university.   There is, in general, no guarantee that the student will be able to transfer to the university of her choice even if the student does well at the community college, and the courses at the community college are not specifically designed to ease entry into a specific university.  The Kaplan partnerships, however, are designed specifically for each of their partners, and student success leads automatically to entry into the partner institution.  Thus Kaplan is entering in the UK into a space that is dominated in the US by community colleges, and does so in a way that brings  special benefits to the customer (the student) that the community colleges generally cannot provide- guaranteed entry on meeting pre-determined standards.  That sounds like one of the characteristics of a disruptive innovation!

Eleven United Kingdom universities have banded together in a group called NCUK (Northern Consortium United Kingdom) that provides similar transition education through centers in a number of countries, including China, Japan, Vietnam, and India.  Sheffield and Liverpool are among the member universities.  Again, students who successfully complete the NCUK programs are guaranteed entry into a NCUK institution or one of their partner institutions.  The centers are run by educational organizations in the individual countries, with NCUK being responsible for assuring the quality of the programs.  The local partner in China has been ACE Education. In 2006, ACE and NCUK jointly opened the Shanghai-British College in partnership with, and located at the University of Shanghai for Science and Technology. Students will be eligible to transfer to one of the NCUK universities after the first year, but can also stay for 4 years in Shanghai and get a British bachelor's degree. Those who wish to get a Chinese degree must have taken the national college entrance exam, and spent at least 3 years in Shanghai.

Since this post is about Kaplan, it will not surprise you that last April(2007), Kaplan took a minority interest in ACE, and a joint venture Kaplan ACE was set up.  At that time, Kaplan ACE became the educational provider in China for the NCUK.   In November 2007, Kaplan became the majority owner of Kaplan ACE.  Thus, several UK universities found themselves outsourcing in China to the same provider that they had outsourced to back home in the UK. 

At its Asia Pacific Management Institute(APMI), Kaplan offers a variety of undergraduate and graduate degrees through the auspices of affiliated accredited institutions of higher education in the US, the UK, and Australia. The headquarters of APMI is in Singapore, with a branch in Hong Kong.  APMI recently opened (April 2007) the Kaplan City Campus in Singapore, which at 60,000 square feet is “the largest city campus in Singapore for a private education institution.”  Many of the degree programs described on the APMI site involve regular, often weekly, classroom sessions taught by “faculty from” the degree granting institutions. 

It would be interesting to know more about these faculty who seem to be stationed in Singapore's Kaplan City Campus (or Hong Kong) where they are teaching weekly,  rather than at the home of the degree-granting university. It would certainly be reasonable for Kaplan to take on the task of identifying suitable candidates for teaching positions, thus removing one of the obstacles most institutions encounter when they consider teaching offshore.  Were this to happen, then, in effect, the partner institutions at APMI would be outsourcing the teaching module of their programs to Kaplan.

These programs are not revolutionary,  but they do seem to indicate an evolutionary exploration of ways in which for-profit higher education may  be able to work with traditional non-profit higher education for mutual benefit.

      

Comments

[Lloyd]

Charles -Thanks for the comment about Softbank - worth following up on. It will be interesting to follow Laureate and Kaplan to see what they do in Japan.

[Charles Jannuzi]

Last year it was announced that Laureate was acquiring a controlling amount of shares of INTI University College in SE Asia (mostly Malaysia).

See:

http://www.forbes.com/markets/feeds/afx/2007/09/18/afx4132819.html

Also, Japan has more private universities than it does national or public (with these latter two types being recently corporatized). But these are organized as non-profit trusts.

Recent legislative and regulatory changes, however, encourage non-profit institutions to move into profitable business activities, while allowing for-profit companies to run universities and colleges. Softbank is the best example of a for-profit company moving into HE in Japan. I wonder if Laureate or Kaplan--or private equity with links to them--has noticed the changes in Japan and taken stakes in Softbank or its educational enterprises?