In March 2019, the president of the University of Massachusetts system announced with great fanfare that it planned to create an online-only college that would become one of a handful of major national players in online education with strong regional footholds. "The time to act is now," Martin Meehan said at the time.
It took two and a half years, discussions with more than 100 potential partners and overcoming a lot of red tape, but Meehan and UMass finally have their online college. They announced Thursday that Brandman University, a private nonprofit institution in California that serves more than 10,000 students online and at 25 physical locations, will become UMass Global. It will be affiliated with the public university system but governed as a private institution under an independent board of regents. UMass expects that its visibility and reputation, especially in the Northeast, will help Brandman reach more adult learners around the country.
Under the unusual arrangement, UMass will not make any up-front payments. Chapman University -- which created Brandman in 1958 to serve military service members and other nontraditional students -- will receive a total of about $130 million over 10 years in exchange for ownership of Brandman and the building from which it operates in Irvine, Calif. Those payments will come from Brandman, but "supported" by UMass if needed, said Don Kilburn, CEO of UMass Online, which serves as a clearinghouse for online programs at four of the system’s five campuses and will work with UMass Global as well.
By aligning with Brandman, UMass becomes the latest public university to make an aggressive foray into the market for educating and training adult learners, following Purdue University's purchase of Kaplan University in 2017, the University of Arizona's acquisition last year of Ashford University and ambitious plans in Missouri, Louisiana and most recently Arkansas.
All of them have eyed the massive market of tens of millions of adults who lack a college degree but need education and training to enter or thrive in the workforce, hundreds of thousands of whom are now enrolled at national nonprofit institutions such as Southern New Hampshire University or Western Governors University. Others -- though far fewer than a decade ago -- are enrolled at for-profit institutions.
Brandman is far smaller than the Southern New Hampshires and Western Governors of the world, but Kilburn said it had attracted UMass with its strong outcomes (58 percent of its students earned a bachelor's degree within eight years, and 22 percent more transferred) and low student loan default rate (5.2 percent).
Kilburn said the structure of the arrangement meant that UMass would avoid some of the perceptual and structural problems that have plagued Purdue and Arizona, which sought to turn formerly for-profit institutions into public ones, while keeping business relationships with the online program companies that spawned them.
"By keeping it as a nonprofit and not having to work with an external for-profit [online program management company], we think this gets over some of the issues elsewhere," Kilburn said. "This structure is different, and could become an alternative for private institutions that want to align with publics."
Long and Winding Road
The path to the UMass/Brandman deal has had many twists and turns. UMass hired Kilburn, a former Pearson Education executive, in 2017, to help it become a bigger player in online education, signaled formally by Meehan's pronouncement in March 2019.
Rumors abounded that UMass would look to buy one of the numerous online for-profit institutions that have increasingly sought a nonprofit home. But the combination of Massachusetts politics and a changing regulatory environment in Washington made that unlikely.
UMass announced more than a year ago that it would establish a "strategic partnership" with Brandman, but it stopped short of suggesting at the time that it would purchase or absorb the California institution. In retrospect, it's clear that the challenges of crafting a new structure and getting it through the federal regulatory process (especially with the transition from the Trump administration to a short-staffed Biden administration) contributed to the delay.
The UMass/Brandman arrangement differs from those that have come before it. UMass Global will not be a public institution embedded in its state's university system, as is the case for established online institutions like the University of Maryland Global Campus or the recently created Purdue University Global, which grew from the purchase of formerly for-profit institutions.
Instead, UMass Global will be an "affiliate" of the UMass system, operated by a board that has representation from UMass but is not controlled by it. The chairman of UMass's Board of Trustees, Robert J. Manning, will be chair of the UMass Global board.
That structure is similar to that of the University of Arizona Global Campus, which resulted from the sale of Ashford University. But UMass Global and Arizona Global will differ in that the latter is contractually obligated to pay the for-profit company that sold it, Zovio Education, to manage much of the online university's operations, an arrangement that has generated controversy. UMass Global will have no such arrangement. (Note: The three previous paragraphs have been updated to clarify that the University of Arizona Global Campus is an independent rather than public institution.)
UMass Global will retain its accreditation by the WASC Senior College and University Commission (which approved the change of control last fall). Gary Brahm, Brandman's chancellor, will remain in charge of UMass Global.
Chapman, which founded Brandman, will receive $96 million over a 10-year period, paid by Brandman from its revenues. Brandman will also pay $37 million to buy its building from Chapman. Most of the payments begin in the sixth year of the arrangement, Kilburn said.
The combined institution will have stronger name recognition, which should help UMass Global reach a bigger, wider audience than Brandman's current roughly 10,000 students in 45 states, UMass officials said.
"By marrying these two institutions, we expect to see a pretty robust growth rate in the Northeast," said Katherine S. Newman, system chancellor for academic programs at UMass.
Newman said UMass Global would build on Brandman's current offerings, which focus on degree completion for working adults, refreshing and strengthening the skills of career changers (including for companies like Walmart and Disney with which Brandman currently works through Guild Education), international learning, and early college programs.
Newman's comments about "robust growth" raised a yellow flag for Stephanie Hall, a senior fellow at the Century Foundation who tracks higher education policy. Hall noted that in documents analyzing the proposed arrangement between UMass and Brandman, U.S. Education Department officials expressed concern that overly fast growth could put students at risk.
That is a common worry for regulators in the wake of the hyperspeed growth of some for-profit institutions in the 1990s and 2000s, and Hall said that tension would be "something to watch" going forward.
Hall acknowledged, though, that based on the information shared about the arrangement, the UMass Global-Brandman approach appeared to avoid some of the issues raised by mergers -- like those involving Purdue and Arizona -- between public universities and newly nonprofit institutions spun off by technology companies that continue to provide services to the merged institution.