Once one of Arizona’s Largest Companies, University of Phoenix nears Sale. Here’s who’s Buying it

Article originally posted on AZ Central on May 19, 2023

The main campus building of University of Phoenix on 1625 W. Fountainhead Parkway on Sept. 9, 2015, in Tempe.

The University of Phoenix, which once boasted hundreds of thousands of students and generated billions of dollars in revenue, is on track for a $550 million purchase by a not-for-profit entity created by the University of Idaho.

The Idaho State Board of Education voted in favor of the deal Wednesday, moving quickly after the potential deal was publicly announced.

The affiliation could start by early 2024, assuming the universities receive the necessary approval from regulators including the Higher Learning Commission, which oversees the University of Phoenix. The University of Idaho said it intends to retain University of Phoenix staff and administrators and keep open the latter’s campus near Interstate 10 and 32nd Street.

The not-for-profit corporation would acquire the University of Phoenix using money raised from the sale of bonds, without requiring funding from Idaho taxpayers.

The pending acquisition comes roughly three weeks after trustees of the University of Arkansas narrowly rejected a similar proposal, at a purchase price estimated at about $500 million, according to an article by Inside Higher Ed.

Under the deal, Apollo Global Management and other current owners of the University of Phoenix would transfer $200 million to the new not-for-profit corporation. The University of Idaho pledged to pay up to $10 million a year should the not-for-profit corporation miss payments on its bonds. Conversely, the University of Idaho stands to receive $10 million in annual funding from the affiliation.

New chapter for once high-flying University of Phoenix

The University of Idaho acknowledged past problems at the University of Phoenix but said the school has worked to improve its reputation under Apollo Global Management and other institutional investors, which purchased the company for $1.1 billion in 2017.

The predecessor parent company, Apollo Group, founded by Dr. John Sperling, was for years one of Arizona’s largest, most valuable and most visible public corporations, generating a profit of $553 million on revenue of $4.9 billion in 2010 and regularly placing Sperling among the state’s wealthiest billionaires.

From its start in 1976, the University of Phoenix eventually counted more than 450,000 students but enrollment plunged amid a series of lawsuits, fines and other punitive actions by regulators, including a $191 million settlement of a deceptive-advertising lawsuit in 2019.

A big part of the problem was that legions of students were graduating with mountains of debts but not finding well-paying jobs to support their loan obligations. The university currently has about 85,000 students and offers various programs ranging from professional credentials and certificates to bachelor’s, master’s and doctoral degrees.

A University of Idaho statement also noted other examples of traditional public universities buying online schools, including Purdue University and Kaplan University, the University of Massachusetts and Brandman University and the University of Arizona and Ashford University — a controversial affiliation that created the University of Arizona Global Campus.

Chris Lynne, the University of Phoenix’s president, noted the school’s historic focus on providing “accessible, career-relevant education” to nontraditional students.

“The university has focused on student outcomes, support and upskilling, as well as understanding and reacting to marketplace trends from employers, and innovating ways to make online higher education more accessible and achievable,” he said in a statement following the Idaho State Board of Education decision in favor of the purchase.

“We are excited to build on the great legacy of our institution by working with University of Idaho, one of our nation’s leading public universities.”

Universities confronting the enrollment ‘cliff’

Scott Green, president of the University of Idaho, noted that higher education in general is changing, with an impending “national enrollment cliff” in the number of students, with smaller class sizes and fewer traditional students but also new opportunities to innovate.

“By affiliating with University of Phoenix, a leader in online higher education, we bring together the best of both systems and build on our common desire to educate students,” he said.

The affiliation also would broaden the University of Idaho’s reach to mid-career, adult students. The university sits on a traditional and bucolic — but remote — campus in northern Idaho. It was forced into national headlines late last year after four students were killed in a house next to campus. A student from nearby Washington State University was indicted in the killings by an Idaho grand jury Wednesday.

In addition to the potential for reaching more students, the University of Phoenix offers programs not offered by the other such as in nursing, health care administration and counseling.

The not-for-profit corporation to be established under the University of Idaho would acquire all University of Phoenix assets including the “digital-education platform” and a few other leased campuses that are expected to remain open for at least a while.

The acquisition is subject to various regulatory approvals and other actions that will push the deal’s closing into early 2024. The parties are hoping to get their application before the Higher Learning Commission at the latter’s board meeting in November.

A University of Idaho statement also predicted the affiliation could make more scholarship and grant funding available to students at both schools.