A resolution giving the University of Arkansas System eVersity another 10 years to pay off a $5 million loan that originated from other UA System campuses received committee approval Wednesday at a board of trustees meeting.
The UA System started the online-only eVersity in a bid to enroll adult learners who may have completed some college, officials have said. The 2014 loan, which initially had a 10-year repayment period, covered "start-up" costs, according to board documents.
But enrollment stalled out. In the fall of 2020, eVersity enrolled 794 students, with 95% taking classes part time, according to federal data.
It's not the first time trustees have altered terms of the $5 million loan, as student revenue has fallen short of expenses. State money of about $2 million helped eVersity in its earliest stage, but the school doesn't receive annual appropriations of the type received from the state by other public colleges and universities.
In 2018, the board approved a delay in paying back the principal on the $5 million loan.
The UA System's eVersity budget documents for the current fiscal year state that in the previous year it was hoped that the first debt payment would be made, "but that did not occur."
Last year, the 10-person trustees board approved the acquisition of Lenexa, Kan.-based Grantham University, with stated plans to have eVersity merge with what's now known as University of Arkansas Grantham.
Nate Hinkel, a UA System spokesman, said the transition has begun already with some students.
"This transition also includes UA Grantham taking over eVersity's financial obligations, along with integrating eVersity's workforce and award-winning course design and other unique aspects of its mission and business model," Hinkel said in an email Wednesday. "This will all combine to create an effort that will more than triple the online degree options and also add graduate programs available for students."
UA System trustees met Wednesday at the University of Arkansas at Little Rock, holding the first of two days of meetings.
The board's Audit and Fiscal Responsibility committee's vote to extend the repayment period on the 2014 loan requires full board approval, as does the committee's vote Wednesday to formalize into a loan other support provided to eVersity.
"We have basically subsidized the operations for eVersity with system reserves to the amount of 1.8 million," Gina Terry, the UA System's chief financial officer, told trustees.
Terry said the board's policies required that this amount be "formalized into an inter-institutional loan."
The $1.8 million loan would by repaid over 10 years and have an annual interest rate of 1.75%, "with interest only to be paid in the first year of the loan" and principal payments "commencing thereafter," according to a board resolution.
Terms of the $5 million loan are also changed to require interest-only payments for the first seven years of the loan, according to the board resolution voted on Wednesday. The annual interest rate is also 1.75%.
Full board approval is expected today.