The private-equity firms that own the online University of Phoenix decided to sell, probably because the getting is good. The online for-profit college market grows more regulated and crowded.
The University of Phoenix has tens of thousands fewer students than it once did. Still, it has nearly 80,000 enrollees with which to tempt a university president who seems to have real affinity for online higher education.
These private-equity owners came in 2021 to the University of Arkansas System because they saw either a sucker or a worthy serious prospect. Dr. Don Bobbitt, the president, has tried for more than a decade to make online expansion his signature accomplishment, but his "e-versity" hasn't been remotely all that he envisioned.
Traditional college enrollment is projected to decline. That has to do with birth rates, lifestyle changes, costs and technological choices. Beyond that, state governments trying to contain budgets have found the handiest places to save are human services to poor people and higher education. The colleges are seen by stingy legislators as ever-able to jack up tuition. But there's a practical limit to that.
One way to deal with the challenge is to bring in new kinds of students studying in new ways--adults, for example, wanting to take the occasional online course to broaden themselves or their employability, and maybe get an advanced degree. The University of Phoenix has been the vanguard of online higher education, though with a checkered history of regulatory citations and lawsuits.
Here is the deal as it has been explained to me. The price of the University of Phoenix might be a half-billion dollars, counting some early operating money. As a public government institution, the UA doesn't have that kind of spare change or the ability--or state constitutional authority--to borrow or to buy a for-profit enterprise.
So, Bobbitt and the UA system administration have ... "encouraged" is the word used ... the creation of a middle-man nonprofit organization consisting of UA friends as board members. This nonprofit would seek the borrowed funds and then own Phoenix, which would convert to a nonprofit.
The UA itself wouldn't be out a penny and it would have no management authority over Phoenix. But its friends the middle men would. What the UA would reap is an estimated $20 million a year for a licensing agreement with the online university by which the online entity would call itself "The University of Phoenix, an institution of higher learning and an affiliate of the University of Arkansas," or something like that.
The Bobbitt administration says the UA will reap other benefits by the affiliation, all yet to be defined. Maybe, for example, the UA-Fort Smith drone program could become a partner of Phoenix to market the program for agricultural purposes through Phoenix, which, being a large online university, reaches a lot more people than UA-Fort Smith does.
The UA Board met Wednesday and became divided rather starkly.
Three or four of the 10 board members looked to be fully on board. One, Ted Dickey, said not taking the deal would make the UA a Blockbuster to the next university's Netflix.
Kelly Eichler, who works for Gov. Sarah Sanders, said that UA institutions were going to be taking budget cuts in the future, and thus would need the deal.
Some observers wonder if she'll vote, or ought to be allowed to vote, considering that she is married to the head of investment banking for Stephens Inc., which has done a positive study on the proposed arrangement.
Debra Hale-Shelton of the Arkansas Times reported in February from a freedom-of-information request that Stephens stands to earn a commission of more than a million dollars if the deal goes through. The UA's conflict policy refers to family members and potentially unfair advantages.
That might become a matter of contention in a close board vote.
Board chairman Morril Harriman was dubious Wednesday about what was in it for the UA and whether the deal reflected a de-emphasis on in-state education. Sheffield Nelson seemed not to like the University of Phoenix's checkered past. And board member Steve Cox complained about getting handed a complex deal on a Wednesday and being asked to vote on Monday on a resolution to go forward, which is the plan.
Harriman's dubious position seems understandable. Nelson's disapproving one seems defensible. And Cox's--if it is to cool heels if only for a short time for more consideration--seems positively prudent.
It may be a great deal for the UA--$20 million in free money, new opportunities via the affiliation and all liabilities and risks borne by the middle men.
But the UA Faculty Senate is opposed, disliking the association and the very idea of online higher learning. And there are obligations of public accountability for the UA that are more important than those other universities supposedly sniffing around the deal, presumably forcing this rush job on an issue lying around for a couple of years.
John Brummett, whose column appears regularly in the Arkansas Democrat-Gazette, is a member of the Arkansas Writers' Hall of Fame. Email him at jbrummett@arkansasonline.com. Read his @johnbrummett Twitter feed.