Purdue Global Postscript: About the reduced student support spending

Author

Phil Hill
June 16, 2021

Just over a week ago I shared the Purdue Global metrics and financial summary for fiscal years 2017 through 2020, noting that there was a signficant decrease in spending for student support.

Purdue Global financials and operating metrics for FY 2017 through 2020, showing a post-fee loss of roughly $2 million in the most recent year

It is interesting for FY20 that overall revenues actually decreased ($392 to $388 million) yet operating income increased ($43 to $2 million loss), noting the reduction of expenses from $403 to $372 million. [snip]

What is not clear is why Admissions Expenses and Student Support expenses dropped so significantly. I get why Marketing Expenses dropped, as FY19 required huge spending to establish the Purdue Global brand, but the other two don’t make sense given increasing enrollments – especially at these levels (15% and 12% drops). I wonder if we are seeing some cross-over, with Purdue University providing services in these areas, leading to PG getting some of these expenses off of the books.

Not Based on Cross Subsidies

As a follow up to that post I have asked for clarification by email from the Purdue University spokesperson. The initial response focused on a change in Purdue Global leadership and an adoption by PG of more of the PU advising model.

In the last 12 months, the linkages between Purdue West Lafayette and Purdue Global have steadily grown. First, we moved the headquarters to West Lafayette. But more importantly, PG’s new chancellor and Provost both spent most of their careers as faculty and administrators at West Lafayette. Their familiarity with Purdue and their personal connections are opening conversations between various offices and programs at the two institutions. Also of significance, last Friday Purdue Global announced their set of strategic initiatives (Purdue Global Moves), which fold neatly into the Purdue Next Moves (Purdue WL latest strategic initiatives).

Advising at the two campuses is influenced by that shared leadership, culture, and commitment to student success. This has shaped and will continue to shape advising in the coming years. With that said, the student bodies at the two campuses have very different advising needs, so there is not a shared advising model between PG and Purdue at this time.

I pushed back on this response, noting that there was not a direct answer to the question of whether Purdue University was performing any student support operating functions for PG, and after referencing the second paragraph above, the Purdue spokesperson added:

And this means that no dollars from elsewhere in the Purdue system flow to PG to support advising but there obviously is Purdue leadership and direction.

Finally, in case it helps, I will mention two other details. While there are a number of reasons for student success gains, one additional factor is the recent shift in the composition of the student body. In 2017, 28% of the students were in certificate or associates’ programs. By 2020, that number had fallen to 19%.

And regarding advising, one recent change is that enrolled students now keep the same advisor throughout their enrollment to allow for better relationships, and to keep students from being passed from advisor to advisor. This is more efficient and may lead to better outcomes. Additionally, some initial basic admissions questions are now triaged by technology, allowing more human resources to be directed toward other needs.

Significant Changes

This situation is significant in its own right. Assuming there are no hidden explanations that I forgot to ask about, this means that from FY2019 to FY2020 Purdue Global increased enrollment by 3.3% and reduced the drop rate from 7.34% to 6.58% while reducing student support expenses by 12%. I can certainly see that the shift away from certificate and associates’ program – which traditionally have higher drop rates than for bachelors’ programs – would explain some of this change. But it is also worth considering the other factor mentioned about keeping the same advisor for each student to improve relationships.

To give credit where credit is due, Purdue Global might not have shown increased revenue yet (as of the end of FY20), but it has improved its operations in terms of supporting and retaining students.