Dive Brief:

• Ashford University's accreditor approved its change of ownership, a critical step in the University of Arizona's plans to acquire the for-profit online college through a nonprofit entity set up for the purpose.
• The resulting organization will be called the U of Arizona Global Campus and run separately from the university.
• U of Arizona officials also named nine board members for Global Campus, which include a handful of the public flagship's academic leaders.

Dive Insight:

U of Arizona announced this summer it was planning to purchase Ashford, using the online institution as the framework for expanding its reach to nontraditional students nationwide. Global Campus would pay Ashford's current parent company, Zovio, to provide certain services in exchange for 19.5% of tuition revenue.

Global Campus will be accredited by Ashford's accreditor, the WASC Senior College and University Commission. The Higher Learning Commission accredits U of Arizona. 

WSCUC's approval is subject to several conditions, Zovio stated in an SEC filing Monday. They include that Global Campus be "differentiated effectively" in marketing materials from U of Arizona and its affiliates, and that incoming Global Campus students know how the entities are different. 

Global Campus must also send WSCUC a report within 90 days of the transaction closing that outlines how it will "address student success including in the form of retention and graduation." Ashford has struggled with low graduation and retention rates.

The accreditor issued a formal notice of concern in July 2019, citing issues with student success metrics such as persistence and completion rates. Zovio noted in its filing that the provisions of that notice remain in effect.

The deal has faced pushback, including over how Global Campus programs will be differentiated from U of Arizona's existing offerings. Many faculty members also say the university shirked shared governance processes when planning the arrangement, and that it is unclear how the university will invest in Global Campus to improve student performance.

Other criticism has focused on the financial relationship between the new entity and Zovio. 

One analysis, commissioned by a think tank that has been publicly critical of transactions such as Ashford's, highlighted concerns about Global Campus' ability to get the Internal Revenue Service to approve its nonprofit status. It contended Global Campus is locked into a contract that "appears designed in part to create profits for" a for-profit company.

The IRS approved nonprofit status for an entity set up to run the school when Zovio was planning to separate Ashford independently. The U.S. Department of Education was also requiring Ashford to post a $103 million letter of credit as part of the move, a condition it dropped a month before the U of Arizona news was announced. 

A U of Arizona spokesperson said in an email Monday that the IRS had not yet approved the new nonprofit entity, and that the Ed Department would make its decision about whether to regard the entity as a nonprofit for Title IV purposes after the deal closes.