The College of Arkansas System has confirmed that it’s eyeing a whole acquisition of what was as soon as the premier mega-university within the nation.
The for-profit in query, the College of Phoenix, has roughly 85,000 college students, down from a peak of almost half one million in 2010. Most of its programs are on-line, with a major focus of serving grownup learners.
Any buy could be finished by way of a newly created nonprofit affiliate, which might “assist and facilitate” the transition of the College of Phoenix to nonprofit standing, system spokesperson Nathan Hinkel confirmed. The Arkansas Instances, which broke the information, reported that the worth tag might sit someplace between $500 million and $700 million. The system has not confirmed these estimates.
“The objective … is to advance the system’s mission of offering inexpensive, related training to a broad vary of scholars, and introducing the UA System to new instructional markets,” Hinkel wrote in a ready assertion to The Chronicle.
The system already purchased a smaller for-profit — Grantham College — in 2021, creating the College of Arkansas Grantham. It then folded in its present on-line arm, eVersity, final summer time.
Whereas many particulars, together with the timing for a possible deal, stay unclear, 4 specialists who spoke with The Chronicle say the information underscores the additional dismantling of the for-profit market, and conventional establishments’ continued banking on on-line training as a funnel for brand new college students and income — although most campuses shuttered by the pandemic have reopened.
If a deal goes by way of, “That is the fruits of the period of the for-profits,” mentioned Phil Hill, a associate on the ed-tech consultancy MindWires. “It’s not that there are not any for-profits anymore … but it surely’s placing an actual definitive cap on this decade-and-a-half decline of the for-profit sector. “
Downfall of for-profits
For years, for-profit establishments have confronted each ideological and regulatory battles.
Unhealthy press about misleading advertising and marketing practices and poor post-graduate outcomes has largely soured public opinion of the sector. The College of Phoenix itself agreed to shell out $191 million in 2019 to settle a Federal Commerce Fee criticism accusing the establishment of promoting nonexistent partnerships with employers equivalent to AT&T and Microsoft.
With a for-profit, “you’re enrolling at a faculty the place the much less they spend on truly serving you, the extra they get to pocket,” mentioned Robert Shireman, director of higher-education excellence and a senior fellow at The Century Basis. So in lots of customers’ eyes, attending a nonprofit establishment “offers some safety.”
For-profits even have an growing quantity of crimson tape to navigate, mentioned Eddy Conroy, a senior adviser with the education-policy program at New America. The not too long ago revised 90-10 rule requires for-profits to attract not less than 10 p.c of their income from areas outdoors of Title IV monetary help and military-education advantages. The most recent Schooling Division regulatory agenda, posted in early January, additionally introduced plans to revisit a “gainful employment” rule that will maintain establishments accountable for his or her graduates’ talents to repay debt.
Mainly, “for-profits not need to be outlined as for-profit,” Conroy mentioned.
A number of the extra high-profile acquisitions embody Purdue College’s acquisition of Kaplan College in 2017 to kind Purdue World, and the College of Arizona’s buy of Ashford College in 2020 to create the College of Arizona World Campus. If an acquisition of the College of Phoenix goes by way of, it will go away Grand Canyon College as the biggest remaining for-profit establishment.
(Grand Canyon has itself tried to shed its for-profit designation, and sued the Schooling Division in 2021 for rejecting its bid to be thought of a nonprofit entity.)
College of Phoenix spokesperson Andrea Smiley informed The Chronicle that the establishment acknowledges that the higher-ed panorama is altering, and that officers’ fundamental precedence is discovering an answer that retains — and expands — Phoenix’s mission to serve grownup learners.
“Entities are all the time evolving; they must as a result of {the marketplace} adjustments. The surroundings that you simply’re in adjustments,” Smiley mentioned. “We’ve seen important success during the last 5 to seven years in serving the grownup learner, and we’d prefer to see that success proceed.”
A December 2021 article from Work Shift, a mission of Open Campus Media, captured a few of that progress. It reported that the College of Phoenix had been trimming its catalog of accessible packages to focus extra on graduating its college students and getting them into better-paying jobs, and that its official retention charge — which covers first-time, full-time college students in bachelor’s packages — had risen to 41 p.c, up from about 27 p.c in 2017.
In some situations, acquisitions of on-line for-profits haven’t been clear breaks. Within the College of Arizona’s case, for instance, Ashford College’s proprietor, Zovio Inc., stayed on as an online-program supervisor for Arizona’s newly minted World Campus (that association prematurely ended final yr). This might not be the case right here, Hinkel confirmed in an e-mail.
“The construction being thought of, from what I perceive, wouldn’t entail any ongoing relationship between College of Phoenix’s present possession and the nonprofit,” he wrote.
The net-ed calculation
The College of Arkansas System’s curiosity within the College of Phoenix aligns with one other development, specialists like Hill mentioned: Public schools or programs attempting to shortly broaden their on-line choices, and increasing their attain to nontraditional college students — together with grownup learners — as undergraduate enrollment on the entire continues to fall.
The pandemic accelerated the adoption of on-line programs and packages at many establishments. And knowledge exhibits that even with many in-person restrictions lifted, scholar curiosity in studying on-line stays sturdy. Lately launched Fall 2021 Ipeds knowledge analyzed by The Chronicle revealed the proportion of scholars enrolled solely in distance training was almost double the proportion in 2017 — 30.4 p.c and 15.7 p.c, respectively.
“Covid helped alert us to the truth that there are lots of people who’re nonetheless going to need in-person studying, but it surely additionally made individuals extra comfy with on-line as an possibility,” Shireman mentioned. So universities, the College of Arkansas System included, are “looking for methods to have larger-online footprints to assist defend them in opposition to enrollment declines.”
Why the for-profit acquisition route, although? Most establishments have established an internet presence in different methods: Many have contracted with personal corporations for online-program-management providers, which may embody every thing from recruiting and advertising and marketing to tech assist and software program. In one other strategy, the College of North Carolina system is tapping $97 million in pandemic-recovery funding to kind its personal online-learning platform. Others, just like the College of Florida, started their enterprise into on-line training with outdoors assist, however now keep smaller-scale, and totally in-house, operations.
Specialists say buying a for-profit would possibly really feel much less dangerous, and extra streamlined.
“They’ve already bought the infrastructure in place, and so they’ve already bought college students in place,” mentioned Dominique Baker, affiliate professor of training coverage at Southern Methodist College. “A number of these items could be interesting.”
The College of Arkansas System declined to say extra about why it’s inquisitive about a for-profit acquisition particularly. The system’s proposal for purchasing the for-profit Grantham College, although, spoke to its ambitions to grab a big proportion of the web market. “Greater training is in a interval of disruption,” the proposal learn. “We consider we’re properly positioned to take a daring step towards being the premier on-line establishment serving working adults within the south.”
Excellent questions
Aside from these preliminary musings, specialists are ready to be taught extra. The place will the financing come from? Will the College of Phoenix’s title be preserved? Who could be accountable within the case of future lawsuits or borrower-defense claims?
Baker wonders about high quality assurance too. Who will educate these programs? Are College of Arkansas System college members concerned in these discussions?
“I see worth in on-line training,” she mentioned. “My issues are round: How will we ship that training? And what’s our objective? … It’s the tactic of how we’re doing this that I feel is extremely essential. ”
