Courtesy of the University of Arkansas system
The University of Arkansas system is poised to acquire the online, for-profit Grantham University if the system Board of Trustees approves the deal this morning, as expected.
The 15-institution system has worked to build a robust online education presence for some time, and currently offers 24 undergraduate credentials through its in-house online program eVersity. Bringing Grantham into the Arkansas system as a stand-alone institution would up the number of available credentials to 60, introduce online graduate programs and expand its current virtual enrollment of about 800 students by approximately 4,000.
An acquisition is "the quickest way to expand as opposed to pouring in lots of money to those efforts," said Michael Moore, vice president of academic affairs for the system and chief operating and academic officer for eVersity. "You can certainly grow a program that way, but it's expensive and incremental."
Without that growth, the system's online efforts could flounder, said Trace Urdan, managing director at Tyton Partners, an education advisory firm.
"This is a market where you just really need to have scale in order to be effective," Urdan said.
The deal is virtually free for the University of Arkansas. Terms of the acquisition dictate that Grantham would transfer its assets -- which include its employees, students, marketing department, tuition revenue and course offerings -- to the system for only $1.
It sounds too good to be true, but Grantham was looking for a "successor-steward" for the 70-year-old institution based in Lenexa, Kan., Moore said. As the online market has grown more crowded, it has become more difficult to stand out.
"In the early days, online was pretty much the purview of only the for-profits," Moore said. "The move of the not-for-profits and the publics into online -- and also the increased regulatory scrutiny being placed on the for-profits -- has made it really challenging to compete."
A spokesperson for Grantham declined to comment on the pending acquisition deal, and redirected questions to the University of Arkansas.
The University of Arkansas plans to retain all 170 Grantham staff members and 240 part-time faculty members. Grantham students will have access to the university system's course offerings online and on campus, though Moore expects they will opt to remain online.
If the system board votes to approve the acquisition deal, the Grantham board of directors and the board of the Level Playing Field Corp. -- Grantham's owner -- will need to green light the transaction. The plan also hinges on approval from Distance Education Accreditation Commission, Grantham and eVersity's accreditor.
The acquisition would expand the system's online revenue stream and provide it with another defense against revenue shortfalls and budget cuts, said Michael Horn, cofounder of the Clayton Christensen Institute, a nonprofit think tank. Grantham's available credentials also align with common careers in the state.
"It struck me as very targeted around particular areas of career focus that are probably of need within the state," Horn said. "I suspect that the other thing that was exciting for them was that it probably aligned with areas where they knew that there would be demand.
Arkansas's acquisition of Grantham differs from some of the other high-profile for-profit acquisitions in recent years. Purdue University's purchase of the online giant Kaplan University in 2017 raised eyebrows because it allowed Kaplan, Inc. -- the university's former owner -- to continue to operate non-academic facets of the university and included a revenue-sharing agreement between the company and Purdue.
More recently, the University of Arizona was criticized for its acquisition of Ashford University, an online for-profit institution. Faculty members spoke out against the deal last year, saying that Ashford has a history of preying on vulnerable students.
Grantham has a good reputation among students, Moore said. The deal also does not include any sort of revenue-sharing agreement between the two institutions, nor does it allow Grantham's owners to continue to control the institution after the transaction is complete.
"We have done our due diligence on this institution," Moore said.
The University of Arkansas is ahead of the curve, said Urdan of Tyton Partners. It's likely that more and more public systems will seek to acquire online universities, in part because most -- including Grantham -- primarily serve adult learners, military service members and veterans, which are the populations state institutions should work to enroll in the first place, he said.
"That is a market that really is, from a mission perspective, the proper business of state institutions," Urdan said. "I think this migration of for-profit schools into public universities is in the early innings of what we're likely to see."