The University of Idaho is making significant strides towards its planned $685 million purchase of the once-for-profit giant University of Phoenix, despite facing new challenges on both political and financial fronts.
In a recent victory for the university, a state judge ruled in favor of the university and the State Board of Education, determining that the board did not violate legal limits on closed-door meetings when considering the Phoenix purchase. This decision comes after the Higher Learning Commission, a major accrediting agency, approved the sale, as it already accredits Phoenix.
However, some Idaho state lawmakers are now taking steps to block the deal by introducing legislation to set up a formal review of the purchase. Additionally, Moody’s Investors Service, a leading credit rating agency, has issued a warning that completing the sale could result in a sharp drop in the university’s bond rating.
Currently, both Moody’s and S&P Global give the University of Idaho strong bond ratings. Moody’s suggested that the merger could lead to a potential „multi-notch“ rating reduction, a rare occurrence for the agency. Susan Fitzgerald, a managing director at Moody’s specializing in higher education, stated that the sheer size of the merger could impact the university’s rating.
The University of Idaho has expressed frustration with Moody’s public statements, claiming that the agency lacks a full understanding of the transaction. Phoenix, once the nation’s largest for-profit university, has seen a significant decline in enrollment and revenue due to scandals within the for-profit sector.
Meanwhile, the University of Idaho has faced its own challenges, with a decrease in enrollment at its flagship campus in Moscow over the past decade. Phoenix has been actively seeking buyers among struggling public institutions, offering the potential for increased online enrollment and global competition.
The University of Idaho plans to create a separate entity to own Phoenix’s operations, allowing them to benefit from Phoenix’s expertise and enrollment while minimizing financial risks. The university sees the merger as an opportunity to address the national enrollment decline in traditional students and meet the increased demand from adult learners.
In Idaho, the Republican Party holds political dominance, with members on both sides of the Phoenix purchase debate. Governor Brad Little supports the sale, while Attorney General Raúl Labrador brought the case over closed-door meetings and is considering an appeal.
The university aims to finalize the purchase later this spring, despite the challenges it faces. The acquisition of University of Phoenix represents a significant opportunity for the University of Idaho to enhance its offerings and address the changing landscape of higher education.