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University of Arkansas System in Talks to Buy University of Phoenix

The University of Arkansas system is in talks with the University of Phoenix, one of the largest for-profit colleges in the U.S., about an acquisition, according to the Arkansas Times. The deal, which the Times estimated at $500 to $700 million dollars, would be the most recent example of a higher ed trend: unions between non-profit universities and for-profit, predominantly online schools.

For-profit education has had a difficult decade, due to increasing restrictions initiated by the Obama administration. 10 years ago, the University of Phoenix was burgeoning, with 470,000 students, mostly working learners, who took classes online or in-person at one of over 200 satellite campuses and learning centers. However, in 2019, the university agreed to a $191 million settlement with the Federal Trade Commission over accusations that the school had falsely advertised partnerships with large companies to students. Now, its enrollment is under 80,000, and it plans to shutter all of its outposts except one, in Phoenix, in 2025.

But for-profit schools have been getting snapped up by more traditional institutions looking to expand their online footprints. In 2017, Purdue University bought the for-profit Kaplan University, with its over 27,000 e-learners, to create Purdue University Global. In 2020, the University of Arizona bought Ashford University, a school with 35,000 online students. The University of Arkansas system had previously created an online school called eVerity, which it merged into a small for-profit, Grantham University, which it purchased in 2021.

However, some suggested that non-profit universities buying for-profits were risking reputational damage due to the aggressive marketing and low-value credentials sometimes associated with the sector. Other criticized the structures of the deals, which allowed the now-non-profit online schools to be managed, at least partially, by the for-profit companies that owned them. This, say critics, means that the for-profit companies are encouraged to increase enrollment through aggressive techniques that might mislead students. The Biden administration has suggested that the Department of Education is unlikely to permit similar arrangements.

The potential Arkansas-Phoenix deal would keep the university system insulated from any remaining profit motive. The purchase would be made not by the University of Arkansas itself but by an affiliated non-profit set up for that purpose. The University of Phoenix would lose its for-profit status.

“The UA system itself would not be acquiring the University of Phoenix, and no public or university funds would be involved in this potential transaction,” said Nate Hinkel, director of communications at the University of Arkansas system in a prepared statement. “The completed structure would also not include any remaining private ownership of the non-profit entity or the University of Phoenix.”

Although talks are ongoing, a deal is not yet imminent, Hinkel confirmed to the Arkansas Democrat Gazette. 

"Since our founding, University of Phoenix has been focused on adult learners who are historically overlooked and underrepresented in higher ed. Delivering on that mission, we’ve experienced marked success over the last six years, both in how we serve our students, and their individual success, and we’d like to see that success continue," said Andrea Smiley, Vice President of Public Relations at University of Phoenix. "Entities are always evolving; they have to because the marketplace changes and the environment that you’re in changes. It’s not unexpected that we are exploring opportunities, and we are ready and eager for whatever our next phase will be.”

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