Seeking students in virtual purchase

Plan to buy online university roils critics, while president points to enrollment crunch

Depending on whom you ask, the University of Idaho’s plan to take over the University of Phoenix, a for-profit online school, is either a sweet deal or a potential disaster.

C. Scott Green, president of the University of Idaho, said he viewed the agreement with a price tag of $550 million as a hedge against what is known as the “demographic cliff,” an expected drop in the number of college-age students.

But critics of the university’s plan, like U.S. senators including Elizabeth Warren, nonprofits and a union, have questioned why the state’s top public university would team up with the University of Phoenix, known historically for its low graduation rates and misleading claims, so much so it was recently ridiculed on Saturday Night Live.

The University of Idaho is just the latest publicly funded state school to consider partnering with a for-profit company as a way to develop online enrollment. Arrangements at Arizona State, Purdue and, most recently, the University of Arizona have delivered varying results as higher education faces an existential crisis.

“There are going to be lots of universities that don’t survive,” Green, an alumnus of the University of Idaho and of Harvard Business School, said in an interview.

Green, who inherited a deficit when he became president in 2019, set out to run the university as a business. He cut spending, laid off employees and merged programs. He has also worked to entice students to the campus in Moscow, a city in a remote area of the state called the Palouse, which is distinctive for its vast rolling hills covered in wheat.

College enrollment across the country is expected to peak by next year and then fall precipitously, according to research by Nathan D. Grawe, a professor at Carleton College.

Undergraduate enrollment at Idaho has inched up recently, to around 7,400 last fall, an increase of 3.4% since 2022. But the future is cloudy, especially for a state with one of the country’s lowest rates of students enrolling in college immediately after high school.

Green says the University of Phoenix can deliver enrollment and revenue. But it comes with its own complicated legacy. Founded in 1976, the University of Phoenix grew rapidly, and by 2010, it enrolled more than 450,000 students, mostly online. It aggressively promoted its brand, even acquiring naming rights to an NFL stadium.

Because its enrollment skews toward lower-income students and veterans, its operations have been fueled by billions of dollars in federally backed loans and grants. But along with its growth came allegations of deceptive representation. Thousands of students said they had enrolled and amassed debt but never gotten degrees.

In 2019, the University of Phoenix reached a $191 million federal settlement following allegations that, from 2012-16, it promoted nonexistent deals with companies like Microsoft and Twitter that would help students get jobs. The Federal Trade Commission said it would reimburse 147,000 students as a result of those claims.

The University of Phoenix has transformed itself, according to Andrea Smiley, a spokeswoman for the school. It has closed low-performing programs and has seen higher graduation rates since 2016, when it was acquired for $1.1 billion by a group of investors.

Emphasizing the value of its enrollment, which the university says it has intentionally shrunk to a more manageable 85,000 students, and its net income of about $75 million, the University of Phoenix has been shopping itself around.

It has not been a smooth process. Last year, the University of Arkansas’ board of trustees rejected a proposal, despite the chancellor’s push for a $500 million agreement.

“Why would you lie down with a dog? You’re going to get fleas,” said C.C. Gibson III, an Arkansas lawyer and former member of the university’s board, citing Phoenix’s reputational problems.