University of Phoenix Enrollments Over Time

Adding historical context to the story

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On to the update.

There has been a lot of discussion this week about the University of Arkansas System board voting against the proposed acquisition and affiliation agreement with the University of Phoenix, as described by the Arkansas Gazette.

The University of Arkansas System board of trustees declined to give their blessing to a potential affiliation with the University of Phoenix during a special Zoom meeting Monday, albeit with a narrow majority with five members voting against the proposal, four voting in favor and trustee Kelly Eichler abstaining. [snip]

would purchase Phoenix — estimates are that price could be around $500 million — and the UA System would enter into an affiliation and licensing agreement with Phoenix that would’ve provided revenue to the system.

The system also would have had the opportunity to access technology, content and course management and data analytics used by Phoenix. In return, Phoenix would’ have gained an affiliation with the system and transitioned from for-profit to nonprofit status.

The vote was non-binding, but most observers believe it would be career-ending if the system president moves forward with the deal without board support.

Confusing Statements

What stood out to me in the description of Monday’s board meeting were two quotes by proponents of the deal. One was covered by Inside Higher Ed:

At a board meeting last week, one trustee who favored the affiliation (and voted for it on Monday), Ted Dickey, said that passing on the arrangement would be like Blockbuster failing to buy Netflix. “If we’re not willing to disrupt our own business, someone else will,” he said, as reported by KNWA.

Another was covered by Talk Business & Politics:

During the brief discussion prior to Monday’s vote, [trustee] Fryar attempted to equate the Phoenix deal with the move 50 years ago that saw Fred Smith move FedEx to Memphis because Little Rock would not extend its runway. He said the University of Arkansas System has the chance to not repeat that mistake.

“To me, this is a FedEx moment,” Fryar said.

On its surface, this level of analysis by the Arkansas System board of trustees is stunning. There is no rational way to compare the University of Phoenix in 2023 with Netflix in 2000 or FedEx in 1973. Both Netflix and FedEx were in rapid growth mode and had yet to hit their prime, while the University of Phoenix has been in a decade+ decline with a toxic brand.

The most charitable interpretation of the trustee comments is that they believe the University of Phoenix acquisition / affiliation agreement is the only way to disrupt current operations, but $500+ million acquisition of a declining university with little institutional control is a very expensive and risky bet to make.

Data Issues

Perhaps part of the problem is that it is nearly impossible to find an enrollment chart for the University of Phoenix over most of its lifetime to see the big picture. One challenge is that the US Department of Education’s IPEDS database is not set up for longitudinal data analysis at the institution level, at least when institutions or systems change names and identifiers over time.

In the case at hand, the University of Phoenix has opened and closed more than 100 campus locations, each with their own IPEDS identifier, and they changed how they reported online enrollments in 2014. I found one way to get around this limitation by using the Delta Cost Project data from 1994 - 2012 and combining with our own IPEDS data set starting in 2012.

Enrollment Chart

The following chart is based on Fall Enrollment data (not a perfect measure, but the most consistent one to show historical trends). I have broken it out by campus enrollments and online enrollments, but labeled with total enrollments for each academic year (AY2010 = Jul 2009 thru Jun 2010).

The University of Phoenix began its remarkable growth in the late 1990s, when online was a small part of the mix, and it peaked in AY2010 with nearly half a million students, mostly online. But then the university system declined to the point where it had fewer than 90,000 enrollments in AY2022, and according to media reports roughly 79,000 enrollments today, essentially all online. That is an 83% drop from its peak.

It is true that the current ownership and management have been working on a turnaround for 4 - 5 years, and you can see the enrollment declines moderating in that period. But there is no rationale way to see that chart and think Netflix or FedEx.

Analysis and Descriptions

Purdue University started this conversion trend with its acquisition of the for-profit Kaplan University, turning it into Purdue Global in 2017. Say what you will about that deal (and I have), but president Mitch Daniels knew what Purdue was buying, and they invested heavily into turning around Kaplan / PG’s enrollment decline.

There may be valid reasons for deals of this nature (a public university or system acquiring a mostly-online for-profit university), but the public deserves real analysis from trustees and honest descriptions of proposed deals. Based on news reports, I don’t think that was happening in Arkansas.

If there is a version of this same chart already available and I missed it, please be kind when letting me know that I might not have needed to pull this data together today.

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