Dive Brief:

• The University of Arkansas at Fayetteville’s faculty senate is publicly objecting to the state system's potential acquisition of the University of Phoenix, once a premiere for-profit institution, but which has since lost hundreds of thousands of students and significant clout in the sector.
• Faculty members registered concerns about a possible sale in an undated open letter to the University of Arkansas System governing board and Donald Bobbitt, the system president. They expressed fears about the system’s branding being associated with the University of Phoenix, which they say has a history of poor student outcomes and misleading marketing about the quality of its programs.
• The professors urged the Arkansas system, which enrolls nearly 31,000 students, to instead invest funding “here in the only state in America where one can still find diamonds.”

Dive Insight:

The University of Phoenix was once a powerhouse institution, enrolling almost half a million students at its peak in 2010. Its enrollment has since dwindled to nearly 86,000 as of fall 2021, according to the most recently available federal data.

However, the institution bled students over time amid bad press about the for-profit industry and alleged misleading marketing practices. 

The University of Phoenix epitomized this criticism. In a high-profile deal in 2019, the college struck a $191 million settlement agreement with the Federal Trade Commission over allegations it misrepresented its relationships with major employers like Adobe and Microsoft in its advertisements.

The university has since tried to streamline operations and shake off its bad reputation. It said last year it is on track to close all but one of its physical campuses by 2024. The college’s website lists 10 campuses in California, and one each in Texas, Nevada and Hawaii.

Meanwhile, University of Arkansas faculty remain unimpressed. 

In their letter, they tore into a potential deal, writing that the college’s “history will linger for years to come, and our campus is at the most risk for association with it.”

“The University of Phoenix has proven itself, through strikingly low graduation and retention rates, to be unsuccessful at helping students reach their educational goals, anathema to what we do here,” the faculty senate wrote.

The exact details of a potential sale have not materialized. However, the system has said it would use an affiliated nonprofit entity to possibly purchase the University of Phoenix and remold it into an independent, online nonprofit.

The Arkansas Times, which first reported the prospect of a sale, valued the deal between $500 million to $700 million.

Nate Hinkel, a spokesperson for the Arkansas system, stressed in an email that it would only use private money, not public funds, in a potential acquisition. 

“President Bobbitt remains optimistic about continuing to find innovative ways to bring more resources to the UA System in a time of uncertainty with the looming enrollment cliff and funding that has remained flat,” Hinkel said. “We see this as a very forward-thinking way to generate additional revenue and maximize other benefits of the potential affiliation to reach more people with the value of higher education and the opportunities it creates to be a stronger System.

Arkansas officials have said a licensing arrangement under negotiation with the University of Phoenix could yield about $20 million for the system annually, a point faculty representatives referenced in their letter.

But they wrote they have “serious reservations about that sustainability.”