Mar 15, 2024 - News

Idaho officials are trying to derail a University of Phoenix, University of Idaho deal

A sign that says, "University of Phoenix."

The University of Idaho is attempting to acquire the University of Phoenix. Photo: Scott Olson/Getty Images

The University of Phoenix (UOPX) wants to be acquired by the University of Idaho (UofI), but some Idaho officials are trying to kill the deal.

Why it matters: UOPX is one of the nation's largest for-profit, online platforms for adult learning, but it's previously come under scrutiny by the federal government for deceptive marketing tactics.

  • The Idaho Board of Education approved the acquisition almost a year ago, but the state legislature this month asked the board to reconsider and threatened legal action if it doesn't.
  • Idaho's attorney general is also attempting to block the deal in court.

The big picture: If the plan goes through, UofI would purchase UOPX for $550 million. The online institution would become a nonprofit school and share at least $10 million of its revenue per year with UofI under the terms.

  • UOPX would maintain its faculty, staff, Phoenix campus and independent brand.

Catch up quick: UOPX has reorganized since its past issues came to light in the mid-2010s.

  • Officials point to lower rates of student loan defaults and improved retention and graduation rates to illustrate UOPX's transformation.

The other side: Critics are unconvinced. The Idaho attorney general lost his attempt to block the deal in lower court in January but has appealed to the state's Supreme Court.

  • Three U.S. senators sent a scathing letter last fall accusing UOPX of trying to avoid new regulations on for-profit universities and cautioning that the partnership may harm taxpayers and students.

Zoom out: Universities like UofI are pursuing partnerships with online schools to stave off the impending "demographic cliff," which could be catastrophic for school funding, the New York Times reports.

  • Nationally, college enrollment is expected to peak next year and then fall as a result of lower birth rates.
  • Schools like UOPX cater mostly to adult learners, a student population that's not expected to see the same decline.

Flashback: UOPX attempted a similar partnership with the University of Arkansas last year, but it was ultimately rejected by that university system's board.

Reality check: Other attempts to fold for-profit schools into public ones have run into major issues, including in Arizona.

  • UofA's acquisition of Ashford University added $265 million to its operating budget last year, further complicating the university's financial issues, The Arizona Republic reported.
  • Additionally, the Department of Education last week said it is in the process of ordering UofA to repay forgiven loan debt for Ashford students.

What they're saying: UOPX and UofI say their deal is different because UOPX is financially solvent and would continue to operate as an independently accredited, self-sustaining nonprofit.

  • "UOPX would be fine on its own without UofI and is not being 'rescued,'" the university wrote in a document provided to Axios Phoenix.

Between the lines: Last year, the Department of Education announced it would forgive $37 million in loans for more than 1,200 students who attended UOPX between 2012 and 2014, when the university's advertising "misled prospective students."

  • UOPX has denied any wrongdoing and says it plans to fight any attempts by the Department of Education to recoup the forgiven loans.
  • Worst case, however, UOPX will have $200 million of cash at the time of acquisition to pull from, UofI president C. Scott Green said last fall in a letter to federal officials.

What we're watching: According to the UofI website, the private equity fund that holds UOPX is at the end of its term and must sell imminently.

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