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Posts published in “Day: June 2, 2023”

A big deal

This is a financial deal of an almost unprecedented type, of enormous size, involving a purchase (sort of but not exactly) by the state (sort of but not exactly) that amounts to a transaction involving more money than the state of Idaho spends on all of its higher education institutions put together (sort of).

It might be a good idea. Or not. It’s hard to say.

The deal involves the University of Idaho and the University of Phoenix, an accredited for-profit private university serving about 85,000 students nationally (several  times as many as U of I) mainly through online learning. It’s described as a purchase and also as an “affiliation,” which sounds a little contradictory. Or not.

A “purchase price” of $550 million is noted, although the U of P is said to plan a $200 million cash infusion to the new non-profit corporation which actually will own and operate the University of Phoenix, and taxpayers are said not to be underwriting the deal. So the University of Idaho is buying the institution, except that no, a brand new non-profit is.

The deal got underway, according to reports, in March, with an approach to the University of Idaho from the U of P owners. Why does it want to sell? An online U of I  FAQ says: “University of Phoenix has been working diligently to improve its reputation by continuing and amplifying its focus on student success and outcomes since it was purchased by its current owners in 2017. University of Phoenix management believes the goals set several years ago have been accomplished and is ready for the next chapter in the university’s evolution.”

Let me know if you spot a plausible selling reason in all that.

The U of Idaho is expected to get “$10 million in supplemental education funding” through the deal, which it expects will grow over time. The exact source or rationale for this isn’t specified.

U Phoenix actually is being bought by a newly-created organization, NewU.Inc, by raising $685 million in bonds. How NewU exactly links to the University of Idaho is unclear. Idaho taxpayers are said not to be on the hook except possibly for $10 million of U of I money (is that the same income money mentioned earlier, or not?) which might be drawn upon, which the U of I says almost certainly won’t be needed. Exactly what happens if money does run short also is a little blurry.

So again, how will U of P and U of I relate? Might Phoenix be merged or folded into Idaho somehow? Here’s the FAQ: “Initially, University of Phoenix will operate separately from U of I, in a 501(c)(3) that is affiliated with the University of Idaho. University of Phoenix will remain an independent educational institution operated by its own president and leadership team. There are areas of future collaboration and integration that we will explore and evaluate together. We will take the time to do this right for all involved.” Does this mean it’s largely a financial transaction? The word is that it’s more than that, but how much more?

So why is this happening? The primary reason given: “we share a common mission, to illuminate and elevate students to be successful in their careers and lives.” Right: Same as every educational institution around the globe.

The FAQ also notes the institutions have been doing different things - U of I’s traditional local teaching and younger students against U of P’s far-flung mainly older distance students, each with expertise in different kinds of delivery. The idea that each could learn from the other has some appeal, but how exactly that would happen remains a little fuzzy.

Is there precedent? Yes, to a point, and the U of I named three. Purdue University in 2018 bought the for-profit Kaplan University for one dollar. In 2021 the private not-for-profit Brandman University affiliated (that word again) through a “change of control agreement” with the University of Massachusetts, becoming University of Massachusetts Global. And in 2020, Ashford University was acquired by the University of Arizona and renamed the University of Arizona Global Campus; it has been the subject of many controversies. All three of these acquiring institutions are considerably larger than the University of Idaho, and the purchased colleges all were considerably smaller. And there’s not been a lot of time to observe how these deals have panned out.

So what do we make of the Idaho-Phoenix deal? Based on what’s out there at this point, I’ll admit to not understanding it.

More time for careful reflection and review, by a wider audience, wouldn’t be a bad idea.