The University of Idaho plans to acquire the University of Phoenix for $550 million via a not-for-profit entity it has created.
The proposal is up for approval by the Idaho State Board of Education at a special meeting Thursday at 1 p.m. Mountain time. According to a news release from the State Board on Wednesday, the University of Phoenix would move from a for-profit to a not-for-profit institution after receiving various regulatory approvals.
The request from U of I comes less than a month after the University of Arkansas System board of trustees voted to reject a similar measure to acquire the University of Phoenix, Inside Higher Ed reported in April.
The University of Phoenix is a predominantly online school with about 85,000 students, according to a page about the acquisition on U of I’s website. The university, started in 1976, once had many physical locations across the country, but they have mostly shuttered, including one that used to be in Meridian.
In the early 2000s, University of Phoenix experienced massive growth, with over 450,000 students, but has since seen sharp declines in enrollment. On U of I’s website, it notes that the school “has been criticized, and sued, for business decisions leading to millions of dollars in fines and punitive actions by regulators.”
The school had a lawsuit settlement over deceptive advertising that totaled $191 million in 2019.
U of I said the primary reason it wants to affiliate with the University of Phoenix is to give students more opportunities to be successful. Both institutions serve a large number of first-generation students, the school said, and it believes U of I would benefit from the acquisition.
The university also said the move would allow it to diversify its revenue streams and improve access to higher education with expanded online technologies.
“As we face a national enrollment cliff in traditional students and increased demand from adult learners, this brings together two institutions that complement each other and share a vision for student success,” U of I said on its website.
To acquire the University of Phoenix, the Moscow school formed a not-for-profit corporation to purchase all Phoenix assets. That includes the university’s digital education platform and a few remaining leases for physical locations. According to U of I’s website, a few of the school’s campuses remain open for now but are expected to transition to completely online.
U of I said it plans to keep the University of Phoenix’s leadership and staff. The university’s Phoenix campus, which houses administrative offices, would not close.
The deal is expected to be finalized by early 2024 if the State Board gives the OK.
The purchase price is $550 million, but the seller would provide $200 million in cash that would transfer to the not-for-profit entity once the transaction is complete, according to U of I.
U of I said it would finance the deal through both nontaxable and taxable bonds, which would be separate from the money used to fund the university’s budgets. Idaho taxpayers would not be involved in paying for the acquisition, but the university has agreed to fork over $10 million a year should the not-for-profit entity running University of Phoenix miss payments on debt related to the transaction.
The University of Phoenix currently generates about $100 million in annual cash flow, according to U of I.
In addition to approval from the Idaho State Board of Education, the acquisition would need the green light from U of I’s accreditor, the Northwest Commission on Colleges and Universities, and University of Phoenix’s accreditor, the Higher Learning Commission.
