The University of Arizona is about to close a controversial deal to purchase a for-profit university and convert it into a separate entity dubbed University of Arizona Global Campus.
The Western Association of Schools and Colleges (WASC) approved the deal to purchase Ashford University with conditions, the UA announced Monday. But some UA faculty feel shut out of the process and question the new venture's merit.
"There are going to be critics who still oppose this deal. But I think on balance for the long-term good of these students that we seek to serve and the University of Arizona, it’s going to be accretive to our mission as a land grant university," said UA president Robert Robbins in a press call Monday.
The UA announced in August the plan to purchase the online university with over 35,000 students from it's parent company Chandler-based Zovio for $1. The deal is expected to close in December. Under the terms of the deal, Zovio will receive 19.5% of the tuition revenue from the campus in exchange for providing education technology services.
The Global Campus is expected to generate over $225 million in revenue over 15 years, according to the UA.
The deal has attracted controversy in the months since it was announced. Sens. Dick Durbin (D-Ill.) and Sherrod Brown (D-Ohio) sent a letter to Robbins in August urging caution and warning the acquisition "poses major risks for your current students and your institution’s reputation as one of the nation’s top public universities."
Over 200 members of the university community subject to nondisclosure agreements were able to provide feedback on the deal prior to its announcement. The NDAs were necessary to avoid flouting Securities and Exchange Commission insider trading laws because one party in the deal, Zovio, is a publicly traded company, according to a university spokesperson.
That has done little to assuage the concerns of some who question the merits of acquiring a for-profit university subject to a history of litigation and investigations.
"We need to see a plan to ensure that the good name of the University of Arizona is not going to be dragged down into a money making scheme that is unsavory, legally problematic, and certainly not worthy of the name University of Arizona," said Leila Hudson, an associate professor in the School of Middle Eastern and North African Studies.
Ashford has been accused of misleading prospective students and engaging in aggressive recruitment tactics. A 2008 audit from the U.S. Department of Education’s Office of Inspector General found 84% of students who enrolled in Ashford’s associate degree programs dropped out within a year.
The Consumer Financial Protection Bureau fined Zovio $8 million in 2016 and required the company to refund $23.5 million in private student loans.
The state of California sued Ashford parent company Zovio, then known as Bridgepoint Education, in 2017 for allegedly misleading students about their educational prospects and saddling them with tens of thousands of dollars in debt. The suit is set to go to trial next year in San Diego Superior Court.
The University of Arizona will be protected from legal and financial liability for the suit, according to a university spokesperson.
Hudson, who co-chairs a faculty senate committee looking into the deal, said Monday's conditional approval by the WASC points to the weakness of the venture.
To retain WASC approval, Global Campus must come up with "actionable steps it will take to address student success including in the form of retention and graduation" within 90 days of the sale, according to filings with the SEC.
"It's going to take money to fix that," Hudson said.
The UA won't be responsible for those costs, said Paul Pastorek, who is interim president of the Ashford-Global Campus transition.
"We will do collaborative things together through this affiliation that we have with the University of Arizona. But to be very clear, the funding for the investments that we will make for student retention and graduation and academic improvement will be made solely and strictly by the University of Arizona Global Campus," he said.
He said he understands the concerns people have with the deal, but that the UA has done its diligence. The nine-member board of directors that will govern UA Global Campus, he points out, is completely independent of Zovio. "There are really not any of these old kinds of concerns that have occurred in the last five years," he said.