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+--- Thread: Purdue Global Owes $128 Million. It May Not Be Able To Pay. (/Thread-Purdue-Global-Owes-128-Million-It-May-Not-Be-Able-To-Pay)
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Purdue Global Owes $128 Million. It May Not Be Able To Pay. - smartdegree - 12-18-2023
Looks like PUG finances are in shambles.
https://www.forbes.com/sites/dereknewton/2023/12/17/purdue-global-owes-128-million-to-its-for-profit-partner-it-may-not-be-able-to-pay/?sh=48ba40687998
It’s a bill that, according to the rules that established Purdue Global, neither Purdue University nor the taxpayers of Indiana can pay. They are not allowed to cover Purdue Global’s debts and losses.
Purdue Global, the report says, had a “net operating revenue” loss of $95 million, it has about $142 million in current liabilities, and just $2.6 million in the bank. Purdue Global has a net negative financial position of $38.8 million. In 2022, the net financial position was also negative, at about $32 million. In other words, even though the report shows that it cut spending, Purdue Global’s financial position has moved downward year over year. That’s despite a reported 5% increase in enrollments at Purdue Global, according to the GHC document.
The position of Purdue Global and the size of the debt may make it unrecoverable, a reality GHC told its shareholders. “The Company will continue to assess the collectability of the fee with Purdue Global on a quarterly basis to make a determination as to whether to record all or part of the fee in the future,” GHC wrote.
Back in 2017, when the deal was announced, many celebratory forecasts and predictions were made. None of them involved Purdue Global losing money and defaulting on its debt. For former Purdue President Mitch Daniels, who invested his and Purdue’s reputation on the success of this venture, the upside-down finances and unpaid debt aren’t flattering.
“Purdue Global continues to struggle financially, unable to pay its bills to Kaplan,” said Dahn Shaulis, Editor of the Higher Education Inquirer and early skeptic of the Purdue Global arrangement. “It hasn't been the money maker that Mitch Daniels thought,” he said.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - ss20ts - 12-19-2023
How the heck did PUG end up $128 million in debt? What did they spend $95 million on????
It's a very good thing that Purdue and taxpayers aren't on the hook for that. That would be absolutely ridiculous.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - bjcheung77 - 12-19-2023
Yeah, that's strange, I recall reading somewhere that they were 'breaking even' or something like that and wasn't in the red anymore... This was at least a year ago, but can't recall if I put that on here or the sister board. Hmm, hopefully they get closer to breaking even and getting out of the red zone...
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - Jonathan Whatley - 12-19-2023
Related party transactions, more or less. Purdue Global (formerly Kaplan University) "owes" that debt to its business partner Kaplan, Inc. I imagine if the number becomes truly unmanageable to PUG, Kaplan will renegotiate it down.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - ss20ts - 12-19-2023
They bought Kaplan for $1. They pay Kaplan's corporation for the staffing and 12.5% of profits. How could that be anywhere near $128 million? There's no way PUG will ever be able to pay that.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - Jonathan Whatley - 12-19-2023
(12-19-2023, 11:22 PM)ss20ts Wrote: They pay Kaplan's corporation for the staffing and 12.5% of profits. How could that be anywhere near $128 million?
12.5% of revenue.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - Johann - 12-20-2023
That means Total Revenue must have been about a BILLION dollars, in round numbers. So, if they're flat broke and can't pay $128 million -- ONE EIGHTH of the take -- where'd it all go? I'm sure I'm not the first to ask that simple question. Has anyone left abruptly with some big suitcases recently?
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - LevelUP - 12-20-2023
Purdue Global has over 40,000 students.
We know the online college education model is profitable since a lot of colleges only pay professors around 10% of what they collect in student tuition.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - smartdegree - 12-20-2023
I looked at the financial statements of Purdue University and it looks like Purdue Global is bleeding around $100 million a year. The numbers I saw match the Forbes article - Purdue Global had a net operating loss of $95 million in FY2023 according to Purdue's own financial statements.
(See page 82 of this document)
https://www.purdue.edu/treasurer/finance/wp-content/uploads/2023/12/FY-2023-Annual-Financial-Report.pdf
This doesn't look sustainable. To finance those losses (which accumulate every year) they are probably amassing massive debt as their shareholders (state of indiana) can't save them through equity.
RE: Purdue Global Owes $128 Million. It May Not Be Able To Pay. - Jonathan Whatley - 12-20-2023
Yet Kaplan, Inc. depends on Purdue Global being viable.
If Kaplan foreclosed on Purdue Global and took its assets they'd be left with a for-profit university with bad headlines that they'd have to name something like Kaplan University. That's exactly the situation Kaplan, Inc. chose to get out of by selling what was then Kaplan University to the Purdue system in 2017-18.
They may need to negotiate adjustments to the terms of the deal.