Arkansas trustees reject University of Phoenix

The University of Arkansas system has rejected a proposed alliance with the for-profit University of Phoenix, scared by the reputation of the nation's formerly largest online university.

The vote by the system's board of trustees – 5-4 in opposition – does not legally end the partnership idea being promoted by the Arkansas system president, Donald Bobbitt. But Dr Bobbitt sought the board's approval and acknowledged that the denial seriously damages its prospects.

"Moving forward now is difficult," said a system spokesman, Nathan Hinkel. "He’s disappointed in the outcome," Mr Hinkel said of Dr Bobbitt, "as he believes this would be a beneficial affiliation for the UA system and path forward through the increasingly challenging higher ed landscape."

The outcome is another major setback for the University of Phoenix, which was founded in 1976, and by 2010 neared $5 billion (£4 billion) in annual revenue from 500,000 students at more than 130 campuses.

The institution, however, also became a poster child for the dangers of for-profit US higher education, as it and the overall sector gained a reputation for aggressive and abusive recruiting practices aimed at extracting federal student aid dollars.

Phoenix has dwindled to about 80,000 students, almost all online. It has been trying since early 2021 to convince prospective buyers that its model has value as higher education increasingly needs adult-age students to compensate for declining US populations at the high-school level.

That opportunity was highlighted this past week by the National Student Clearinghouse Research Centre, which said the US now has more than 40 million people in the category of having attended college but still lacking a degree.

That population, as of July 2021, was up from 39 million one year earlier, according to the Clearinghouse, which tracks enrolment data for much of US higher education. Such numbers suggest "an increasingly missed opportunity for states and institutions to reengage" those students, the group said.

Phoenix has argued in marketing materials that it represents a rare opportunity for a traditional US college or university to find a partner experienced in reaching such non-traditional students. Dr Bobbitt has agreed, saying the proposed partnerships would bring valuable collaborations to the Arkansas system.

But system trustees voting in opposition to the idea such they were greatly concerned by Phoenix's longstanding reputation and the high levels of secrecy surrounding the proposed deal. In order to shield the system from potential losses, the partnership was being structured through a complicated alliance between the Arkansas system and a new nonprofit entity that would buy the University of Phoenix and begin transitioning it toward nonprofit status.

The situation also was complicated by conflict of interest concerns. One of the system's trustees, Kelly Eichler, is an attorney serving as a deputy chief of staff to Governor Sarah Huckabee Sanders. Ms Eichler had previously welcomed the partnership, but abstained from the 5-4 vote after a published report said that her husband is the chief operating officer at a financial services firm that's positioned to make millions of dollars from the Phoenix-Arkansas deal.

paul.basken@timeshighereducation.com