UNIVERSITY OF ARKANSAS DEAL TO ACQUIRE UNIVERSITY OF PHOENIX FALLS THROUGH

In January of 2023, the Arkansas Times broke the story that there were talks amongst the University of Arkansas System about acquiring the University of Phoenix, a primarily online college founded in 1979.

Upon the release of this news, UA System spokesperson Nate Hinkel said “The goal in exploring opportunities such as this is to advance the system’s mission of providing affordable, relevant education to a broad range of students and introducing the UA System to new educational markets.”

Amidst many questions from the public, the UA System board of Trustees met on April 19 to vote on the potential affiliation. That meeting resulted in a split 5-4 against acquiring the University of Phoenix with one member choosing to abstain. This vote, however, is non-binding and the deal could still potentially go through.

Arkansas Online reported some of those for the merger said it was time to acknowledge the decreasing enrollment of face-to-face students. Trustee Ted Dickey was quoted saying “If we’re not willing to disrupt our own business, someone else will,” comparing this deal to when Blockbuster declined to acquire Netflix.

Other trustees echoed Dickey’s opinion to merge in order to secure the future of the university system. Trustee Jeremy Wilson stated “this is a conversation about growth” and that “a healthy organism has to grow over time.” Wilson credited a “real funding issue” as his reasoning for supporting the acquisition.

Online enrollment has surged in Arkansas with around 31% of Arkansas undergraduates enrolled exclusively in online only degrees, with an additional 42% of college students enrolled in some online courses according to US News.

Some of the dissenting trustees did not believe this push towards online education was urgent enough to ignore the potentially large troubles with merging with the online for-profit university. Trustees that disagreed cited the fact that the UA System would not have legal control over Phoenix. It would instead be operated through Transformative Education Services Inc., “wholly independent” of the UA System.

Trustee Morril Harriman voted against the merger with a “gutfeeling” and that “something just doesn’t sit right about this project to me.” That gut-feeling may have something to do with the University of Phoenix’s settlement with the Federal Trade Commission for $50 million.

This settlement was the result of a five year investigation into the deceptive advertising tactics by the university to target prospective students. This is combined with declining enrollment in recent years, a nearly 500,000 drop from their peak in 2010.

Despite the concerns surrounding the deal with Phoenix, some board members still stated that the estimated $20 million annual boost to the UA Systems finances is worth exploring.

President Donald Bobbitt does not need the board’s approval to move forwards with the deal. Bobbitt is quoted saying “we want the best – state-of-the-art – and if TES is able to offer that through Phoenix, we want first shot.”

BY KIRSTEN BOU