Dive Brief:

• Grand Canyon University, which has an enrollment of 21,000 students on campus and 70,000 online, has been given approval to become a nonprofit institution in an $875 million deal that some analysts believe may be a direction more for-profit institutions will take, the Chronicle of Higher Education reports.
• While many companies owning for-profit institutions have moved away from them, Grand Canyon Education, the parent company, is expanding its nonprofit Grand Canyon University segment and the services that its for-profit operations offer to it and other universities.
• Under the deal, about 33% of the company’s full-time employees and almost all of its 6,000 instructors will transfer to the university, which will also own its campus in Phoenix. The university plans to increase enrollment to 30,000 on campus and 100,000 online in order to repay the seven-year loan it now has with the parent company. The university was founded in 1949 and became for-profit in 2004. Last year, it generated about $975 million in revenue.

Dive Insight:

Grand Canyon Education will manage the nonprofit university’s technological, marketing, promotional, financial-aid, and other support services. Analysts estimate the nonprofit will pay 60% of its revenue to its former holding company, according to the Chronicle.

The firm hopes to eventually handle those operations for other institutions, a structure that might become more common in higher education. Some experts believe this is part of a trend that will end for-profit universities in their current form and see more institutions becoming nonprofit, while changing the structure of nonprofit institutions, too. In several cases nonprofits have also moved to acquire for-profit universities or re-structure in various ways, most notably Purdue University.

Bridgepoint Education earlier this year combined its for-profit University of the Rockies and Ashford University into a nonprofit institution in a move that has become easier under the Trump administration. However, these moves have drawn criticism from some education leaders, who say they will damage higher education while firms avoid regulation and increase profits unfairly. The former parent company for the University of Phoenix was approved last year to sell the company to investors in a deal valued at $1.1 billion. The Obama administration signed off on the sale, though with several conditions attached, The Washington Post reported.