UA trustees vote against resolution to acquire University of Phoenix
The University of Arkansas System Board of Trustees has rejected a resolution supporting the purchase of a controversial for-profit college.
Board members on Monday voted against an estimated $500 million acquisition of the University of Phoenix by Transformative Education Systems, a nonprofit loosely affiliated with the UA System.
System President Donald Bobbitt said if the deal were to go through, the UA System wouldn’t own the University of Phoenix.
Trustee Kevin Crass, an attorney with Friday, Eldredge & Clark in Little Rock, said he voted against the resolution over concerns with the structure of the deal.
“If the chancellor of the University of Phoenix is doing something that we don’t think is consistent with the University of Arkansas’ mission, the UA System does not have the right to do anything about it,” he said.
Crass also said the contract with the University of Phoenix would only allow termination under certain conditions. Patrick Hollingsworth, general counsel for the UA System, said the deal can be called off in its tenth and final year without needing a reason. He added the deal can also be terminated if the University of Phoenix doesn’t follow trademark or licensing agreements.
Other trustees who spoke out against the resolution echoed Crass, also voicing concerns about the University of Phoenix’s reputation.
According to a Federal Trade Commission press release from 2021, the FTC sent payments totaling nearly $50 million to more than 147,000 University of Phoenix students who may have been lured by allegedly deceptive advertisements. The FTC said the school's advertising gave the false impression that the college worked with companies like AT&T, Yahoo!, Microsoft, Twitter, and the American Red Cross to create job opportunities for its students.
Those who favored the resolution said the deal would provide the UA System with cash flow and allow colleges to improve their online presence. Bobbitt said the deal would bring a guarantee of $20 million a year in revenue generated from royalties and licensing fees.
Trustee Nate Todd, the former Secretary of the Arkansas Department of Veterans Affairs, said there could be risk associated with not taking the deal and turning down the chance to get more involved in virtual learning.
“From my assessment of the environment, brick-and-mortar is going to get more expensive and if the University of Arkansas System does not get in this space, we will be in somewhat of a less than optimal position,” Todd said.
The vote doesn’t stop Bobbitt from pursuing a deal with the University of Phoenix. UA System spokesperson Nate Hinkel said in a statement Bobbitt has previously expressed it would be difficult to move forward without the board’s support, adding he is disappointed in the decision.
In a statement to KUAR News, Andrea Smiley, vice president of public relations for the University of Phoenix, didn't comment on the board's decision. Smiley said that the two organizations have the same goals.
“Throughout our discussions, it's been clear that University of Arkansas System leadership recognizes the high quality of our education, our common accreditation, commitment to student success, and capacity to help the University of Arkansas System achieve its goals. Since our founding, we have been deeply committed to successfully serving working adult learners and will continue to pursue that mission in partnership with those who share that critical goal,” she said.
Schools under the UA System include the University of Arkansas at Fayetteville, University of Arkansas at Little, University of Arkansas for Medical Sciences (UAMS) and University of Arkansas Pulaski Technical College.
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