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Last summer, the University of Arkansas system raised a stir when it announced plans to acquire Grantham University, a commercial online institution that serves military students, for just $ 1.
At that time, the system already had an online college – eVersity, which was launched in 2015. The idea was to end up combine Grantham University with eVersitya plan that is implemented in less than a year.
Late last month, trustees of the system voted to shut down eVersity and transfer its assets to an acquired institution now called the University of Arkansas Grantham or UA Grantham. UA Grantham is now a government agency.
The system began the transition process in January when eVersity stopped accepting new entrants and informed existing students of their ability to complete their programs before the summer semester or transfer to Grantham at the same rate. About 200 students have graduated since the transition began, and nearly 300 students have “taken up and enrolled in Grantham,” Nate Hinkel, director of communications for the system, said in an email. About 120 students are in the final eVersity session and will either graduate or transfer.
In total, the system closes about two dozen eVersity degree programs, all of which have parallel programs at Grantham.
The plan builds on eVersity’s efforts by expanding the system’s online diploma offerings, increasing its alumni presence and creating a greater national presence, Hinkel said.
“In short, it allows us to accelerate our growth quickly,” Hinkel said. This is also in line with the system’s mission, he added.
This is also happening at a time when several other government systems or universities are buying online colleges to increase their virtual offerings. University of Massachusetts and University of Arizona these are just two other colleges that have recently acquired or linked to online colleges to serve more adult students – a big market but one that can be hard to break through.
The online marketplace is much more competitive than it was a few years ago, said Michael Horn, who has written books on the future of education.
“And that’s why the cost of getting there is often significant,” Horn said. “You don’t see that many universities these days can do it on their own from a constant start. You either need a real boost, or an experienced partner.”
While buying online colleges can accelerate growth, these deals are not always slams. Higher education experts warn that buyers may find it difficult to connect the spirit of online colleges with the culture of public universities. Colleges may also face increased public scrutiny if they acquire a commercial institution. And they still have to occupy a niche for themselves in a competitive online marketplace.
Association of commercial and government agencies
Mergers and acquisitions of colleges tend to be complex, and leaders focus on the complexity of combining two different cultures and business operations. Buying a commercial can cause even more difficulties.
In 2017, Purdue University announced plans to acquire Kaplan University for $ 1, attracting approximately 32,000 students and 2,500 faculty members. Purdue used the purchase to build an online college for adult students called Purdue University Global. Meanwhile, Kaplan’s former parent company is providing the new online college with services such as marketing, in exchange for a share of its revenue.
The University of Arizona closed a similar deal in late 2020, buying the University of Ashford Commercial and rebranding the school as University of Arizona Global Campus. The University of Arizona has also retained Ashford’s parent company, Zovio, as a service provider in exchange for reduced tuition revenues.
Both of these deals have raised concerns among policymakers and lawmakers. They are concerned that the ongoing relationship of online colleges with their former owners ultimately favors shareholder needs over students.
In the case of the University of Arkansas, UA Grantham does not have a long-term relationship with its former owners, Hinkel said.
However, the system undertook the obligations of the acquired university. The financial documents published by the system indicate the transfer of assets totaling $ 4.6 million and a similar amount of transfer liabilities, This was reported by the Arkansas Democrat-Gazette.
By avoiding long-term relationships with former owners, the university can circumvent some of the problems faced by other institutions in concluding these transactions.
“They make a profit and really control the organization,” Horn said. “They have no questions about who else the organization serves.”
“You don’t see that nowadays many universities can do it themselves from the beginning. You either need a real boost or an experienced partner. ”
But he and other experts have expressed concern about cultural issues such as maintaining teachers ’autonomy over the courses they have created.
EVersity has just over a dozen employees, most of whom have already taken up their duties at UA Grantham. They will all leave the online college this summer and start working full time at UA Grantham, which employs about 146 full-time staff, Hinkel said. No jobs were eliminated.
In the next few months, faculty members who previously taught for eVersity will begin teaching at UA Grantham. Courses at the online institution are co-developed by designers and faculty who serve as subject experts.
“There is standardization around course design, but the teacher always oversees the course content,” Hinkel wrote.
Carving a niche
Other colleges that have bought commercial universities to expand their online offerings have faced a difficult start. Purdue University Global, for example, has not reached a dead end until fiscal year 2021, and in the first couple of years it has lost tens of millions of dollars. The University of Arizona Global Campus is struggling with enrollment in its first year, though Zovio officials hope they will be able to reverse that trend.
“The examples we’ve seen so far, like Purdue and the University of Arizona, are pretty serious warnings that you’re unlikely to get a lot of income,” said Brendan Cantwell, a professor of higher education at the University of Michigan. Hopes that merging a commercial institution with a well-known brand of state universities would kick off demand have not materialized, he said.
Grantham University faced years of declining student numbers before the U of Arkansas acquired the institution. In the fall of 2014, it enrolled about 12,600 students, and in the fall of 2020, according to federal data, their number dropped to 6,500. This period was marked by a sharp decline in the number of applicants in commercial schools and increased competition for online students.
Today, Grantham has nearly 4,200 students, Hinkel said.
On the other hand, according to Hinkel, eVersity had only 1,200 active students.
He has faced recent challenges. System budget documents say the coronavirus pandemic has not allowed eVersity to go hopeless in fiscal year 2020, and it has not brought enough cash flows to make the first debt payment in fiscal year 2021 on a $ 5 million loan from other campus systems. In January, Arkansas trustees approved a resolution giving eVersity another 10 years to repay the loan, This was reported by the Arkansas Democrat-Gazette.
“The examples we’ve seen so far, such as Purdue and the University of Arizona, are pretty big warnings that you’re unlikely to get a lot of income.”
Brendan Cantwell
Professor of Higher Education, Michigan State University
Richard Garrett, chief research fellow at Eduventures, said it makes sense to merge eVersity in UA Grantham. This is because UA Grantham brings in more revenue and can bring a rewarding collaborative experience.
But the resulting online college will have to find its place in the marketplace, perhaps by serving local students or offering hybrid programming, he said.
“It’s still a problem, and eVersity has also struggled to find its niche,” Gareth said. “It raises a lot of questions about,‘ Where’s the niche? What will be different in the future? “
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