Kerrey previously served 10 years as president of a school in New York. The announcement that he will head a nonprofit institute connected to The Minerva Project, a new university, comes about two months after the Democrat failed in his bid to return to the U.S. Senate, losing to Republican Deb Fischer.
The Minerva Project, a for-profit university, bills itself as more rigorous than Ivy League schools. With its online presence, organizers said it can admit far more students for about half of the cost of an Ivy League education.
The school, which received $25 million in startup money last year, is the brainchild of Ben Nelson, former chief executive officer of the online photo service, Snapfish. Minerva plans to begin classes in 2015, Kerrey said.
Kerrey, who previously served on Minerva's advisory board, will head the Minerva Institute, which will help provide financial assistance and advisory support to students. Kerrey also has experience working for a decade as president of the New School, a self-described progressive university in Greenwich Village.
Minerva will have physical locations across the country, Kerrey said, but it won't own buildings and won't field athletic teams—two ways it plans to keep students' costs lower.
"Students will study together," he said. "They won't sit in front of a screen and do all their work by themselves online."
But students also won't have to sit through classes on subjects they already know or can learn on their own, he said.
Kerrey said his new job will be part-time, based in San Francisco. He will spend some time there, but split most of his time between New York, where his wife lives and his son attends school, and Nebraska, where he owns several restaurants and fitness centers.
After losing to Fischer in his bid to replace former Democratic U.S. Sen. Ben Nelson, Kerrey has been figuring out his future.
Kerrey said he's considering invitations to become involved in two Omaha not-for-profit groups, which he declined to name.
He also is weighing whether to join the board of the Uniformed Services University of the Health Sciences, the country's military medical school in Maryland.
"Navy doctors have a special place in my life; I feel like they saved my life," said Kerrey, referring to his time at Walter Reed National Military Medical Center after losing part of his right leg in Vietnam. He later earned the Congressional Medal of Honor.
"As for whether or not I can do it ... that's hard for me to answer right now, because I don't know how much time I've got for these things," he said. "There's more opportunity to do things than I have hours in a day. I've got to be careful of doing too much."