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Thunderbird Deal Hits a Snag

March 17, 2014

Laureate Education’s controversial partnership with the Thunderbird School of Global Management is on hold. Thunderbird announced Friday that a regional accreditor had rejected the plan for it to join the for-profit network’s chain of 78 institutions around the world.

The Higher Learning Commission (HLC) of the North Central Association of Colleges and Schools this week turned down Thunderbird’s application for the deal to become an independent partner with Laureate, officials from the management college said in a brief written statement.

“HLC informed Thunderbird that the HLC board did not approve the proposed plan, as presented, based on specific elements of the strategic alliance,” according to the institution's statement. “Thunderbird has been given the option to submit a new application addressing HLC’s concerns.”

Some alumni, trustees and faculty members had complained in public and to the accreditor about the planned pact with Laureate, which they depicted as a hostile takeover.

The result of the proposed joint venture would be a “radical shift in the school’s mission, objectives, scope, structure and governance,” wrote five former trustees in a complaint filed with the HLC. The Thunderbird Independent Alumni Association endorsed their letter.

The statement Friday from Thunderbird did not describe the nature of the commission’s objection to the partnership. And HLC typically does not post documents relating to accreditation reviews until they are complete.

An official with Thunderbird said the institution's leaders believe the accreditor’s concerns can be resolved relatively easily, but did not clarify how.

The global management college’s accreditation is not threatened by the decision. Laureate and Thunderbird will continue to work on ways to collaborate, Thunderbird said.

Laureate is a private corporation with a huge global footprint. Its campuses enroll 800,000 students in 30 countries.

The company’s plan for Thunderbird had been for the Phoenix-based institution to remain independent, but for a jointly-owned entity to help run it. While each case is different, this sort of for-profit partnership with an accredited, nonprofit institution has at times been blocked by regional accreditors.

Laureate and Thunderbird planned to split revenue from the joint operating company down the middle. But the for-profit chain would have had a 5-4 majority on its governing board.

Thunderbird’s leaders had hoped to sell the campus to Laureate for about $50 million, and then to lease it back. The sale would have allowed Thunderbird to become debt-free for the first time in its history.

Critics of the joint venture have said the deal was rushed and that Thunderbird’s leaders did not exercise due diligence in vetting Laureate as a suitor. Some questioned Laureate’s academic quality and argued that a partnership with the for-profit would cheapen a Thunderbird degree.

Laureate and defenders of the agreement countered that it would help extend Thunderbird’s global reach. They also said the company’s large infrastructure and deep pockets would benefit students and faculty members.

In an October interview with Inside Higher Ed, Doug Becker, Laureate’s CEO, said criticism of the alliance was overblown and unfair.

“We don’t have universities that are bad universities,” said Becker. “I think we’ve worked too hard and established too strong of a reputation for anyone to say that is the case. But we do have universities that are intended to be affordable and accessible."

 

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