President Green says the University of Phoenix acquisition is a ‘win-win’ situation

The University of Idaho is seeking to acquire University of Phoenix in order to survive the potential 2025 enrollment cliff. 

In February of this year, University of Phoenix sellers approached UI about a potential acquisition deal. The $550 million deal initially came as a shock to the Moscow community. The shockwaves then permeated throughout the rest of the country. 

UI’s acquisition of University of Phoenix through not-for-profit Four Three Education Inc. would guarantee the Vandal institution $10 million a year. However, the university is expecting to get more than $25 million a year through the acquisition, UI President Scott Green said. 

That income would help UI through the 2025 enrollment cliff. This cliff is expected to reach universities and colleges across the country. The 2025 freshman cohort was born during the 2008 recession. This recession led to a decrease in births, which is what leads universities to expect an enrollment decline of 10-15% in the fall 2025 semester, President Green said. 

Through the University of Phoenix acquisition, UI could mitigate revenue losses due to the looming enrollment cliff. This solution only scrapes the surface of opportunity Phoenix could provide UI, according to President Green, saying Phoenix’s online infrastructure could become a wealth of knowledge for Vandal online learning.  

With 560 University of Phoenix courses already available for Vandals to take, online learning opportunity will only grow, President Green said  

But many of these solutions seem complicated, almost indigestible to some, ASUI President Tanner McClain said. McClain thinks the source of controversy is simple – confusion and misunderstanding. 

“I want to be clear on this. Everything I have experienced, from having discussions with university leadership, they are being fully transparent,” McClain said after having met with President Green about the acquisition. “They are being fully transparent to the public, to the student body and to all stakeholders involved.” 

“It’s just a matter of communicating that transparency, which is no easy task. This is complicated, and there’s nothing wrong with that,” McClain said. 

The initial conversations held in February seemed to move quickly to outsiders. However, President Green said the process was “slow rolled” and that the university did its due diligence before proceeding with the deal. 

“It was something in the back of my head, but something I never thought I would have the opportunity to do,” President Green said. 

He referred to Purdue’s 2018 acquisition of online giant Kaplan University as an example he hoped he could follow. That successful deal was evidence that deals like this could be made and could benefit both universities. However, President Green planned for UI to take a different approach. 

In February, that approach presented itself. In 2017, Phoenix moved from being publicly traded stock to being privately owned and held, University of Phoenix Provost John Woods said. University of Phoenix, a private, for-profit online university, is owned by a group of investors, Apollo Education Group. Ever since Apollo Education Group bought University of Phoenix, the online institution’s leaders were aware that it would be sold and the deal would terminate, Woods told the Argonaut. 

University of Phoenix initially approached the University of Arkansas for the deal nearly two years ago. However, earlier this year, the University of Arkansas board of trustees rejected the deal in a 5-4 vote. Phoenix then sought out UI, among other universities, President Green said. 

“I didn’t want to be used as a stocking horse, so we kind of slow rolled it at first,” President Green said. “It became clear that they were interested in us. The numbers were terrific, but beyond that, we met with their president and provost, and they were terrific. In the entire meeting they didn’t talk about anything but student success.” 

The two universities agreed that their missions and goals as institutions aligned, and that this deal could benefit students in Idaho and across the country. UI proceeded to create a separate not-for-profit 501c3 called Four Three Education Inc. Four Three will be the entity that acquires and funds the $550 million deal, not UI. 

Through this, University of Phoenix will transition from a for-profit institution into a not-for-profit institution, a move that will only improve Phoenix’s purpose and image, Woods said. 

“By becoming a not-for-profit, we can solely focus on our mission and will never be misaligned from our goals” Woods said. “We don’t get enough credit for innovations we produce because people think it might be out of a profit motive. We pioneered online learning.” 

Phoenix has encountered controversy and scandal in recent years, such as a $191 million lawsuit settlement with the Federal Trade Commission for false advertising in 2019. 

However, both President Green and Woods emphasized that the settlement was a business deal, not a revelation of wrongdoing. 

“We admitted no wrongdoing,” Woods said. “To continue the fight with the FTC was not something that anybody wanted to do. It could be expensive and take a long time and distract us from our mission, so we settled.” 

Controversies such as the 2019 settlement resulted in garnered attention nationwide about UI’s decision in pursuing the deal. Sens. Richard Blumenthal, D-Conn., Richard Durbin, D-Ill. and Elizabeth Warren, D-Mass. sent a letter to President Green asking that he reconsider the Phoenix acquisition, asking him to call off the deal. 

Green said he couldn’t speak to the motivation of those senators, but referred to the above-mentioned positives the deal would produce for UI.  

“Private education is not well liked by politicians, and politicians need issues to run on. I answered their letter and pointed out the incorrect information in there and the fact that we were trying to address the issues they raised in there through the structure we put in place. Hopefully that will be that, but we’ll see,” Green said. 

Some were concerned that the $550 million deal would take resources away from UI students, but McClain wanted to assure Vandals that is not the case. 

“My main focus and number one priority was that no student fees were used to fund this deal, no student programming would be directed away, as well as what the student impact would be on this deal.” McClain said. “Of course, no student fees were used in the purchasing of this deal. There will be no impact on the fees we pay every year. No programming cut or taken away. I don’t see any way this can negatively impact student life at University of Idaho.” 

President Green called this deal a “win-win,” saying UI will benefit from guaranteed revenue, Phoenix’s online ingenuity and student support system. Because the funds for the deal are set up through Four Three Education Inc., UI does not have financial liabilities should the deal fall through or Phoenix run into financial deficits. 

“We will have a lot more opportunity to invest in our university, should this go through, and survive the enrollment cliff better than most,” Green said. “There is no downside to them (students) and almost complete upside. If we have more money to invest in them and protect our operations and programming during the enrollment cliff, they will benefit.” 

University of Phoenix’s accreditor’s (Higher Learning Commission) board meets the first week of November. If the decision is favorable for UI, Four Three Education Inc. will look to place the bonds for the acquisition in January. 

Joanna Hayes can be reached at [email protected]