FAYETTEVILLE, Ark. — Leaders at the University of Arkansas System say they are still considering a deal to affiliate with the University of Phoenix—a for-profit institution with 75,000 enrollees.
UA System President Donald Bobbitt has been defending the proposed deal against critics — including the former chairman of the system's board of trustees.
In an interview this week with Arkansas Business, Bobbitt says the deal could mean $20 million dollars per year for UA.
What is the UA System planning?
The broad strokes are this:
The UA System has formed a nonprofit organization called Transformative Education Services Inc., which — if all goes as planned — would buy the University of Phoenix from its current owner — a private education company called Apollo Education Group.
Bobbitt says the system would not use public money or university money to buy the company. Instead, the TES would borrow money from a lender to finance the purchase.
After that, the UA System would reach a licensing agreement with TES — so TES could use the UA System name when promoting the University of Phoenix.
And that deal, he said, would yield $20 million a year for the UA System to use how it sees fit.
What do the critics say?
This deal has been panned by some key critics — one is the former UA System Board Chairman Clif Gibson — and the faculty senate at the UA's Fayetteville campus.
Some of the biggest misgivings they've cited deal with the University of Phoenix's reputation — concerns about legal liabilities — and how Bobbitt has handled rollout of the proposal.
In December 2019, the University of Phoenix reached a record $191 million settlement with the Federal Trade Commission to end charges that it used deceptive advertising to attract prospective students.
The question is, does the UA System want to be affiliated with a brand many say is tarnished?
Meanwhile, thousands of those Phoenix students have asked the Department of Education to discharge federal student loans they took to attend Phoenix. There's a concern that — if the department does so — it will seek that money from Phoenix, which could put the UA System at risk.
And finally, the former board chairman — Gibson — thinks that Bobbitt should have come to the board sooner with details about the possible deal. Instead, first word of the deal broke in the news media — the Arkansas Times newspaper in January — and *not from Bobbitt telling the board.
How does Bobbit respond to the critics?
Overall, he seemed to be fairly undeterred.
A few things stand out:
One — Bobbitt thinks an affiliation with Phoenix will be *good for the UA System, in that it will spread the UA's good reputation beyond the state's borders.
Two — Bobbitt thinks that the nature of the deal — the nonprofit TES buying Phoenix — insulates the UA and public and university funds from any harm or liability.
Three — Bobbitt said he planned on sharing early word of the deal with trustees, but simply got beat to it by the press.
And finally — despite criticism, Bobbitt is still very committed to this deal, wanting to get it done later this year.
He actually says he doesn't think he needs the board's vote to do it, but that it's important he has trustees' support.
It could cost around $500 million for this TES nonprofit to buy the University of Phoenix.
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Editor's Note: A previous version of this article listed Donald Bobbit's name as John Bobbit. The attached video does erroneously use the name John.