The University of Phoenix was bought by a consortium of investors through the February 8 sale of its parent company, Apollo Education Group. The new owners paid $1.1 billion for the struggling for-profit college, or $9.50 for share, and will take the company private. Apollo Education (APOL) closed at $6.85 on Friday.
Tony Miller, a former deputy secretary at the Department of Education (ED) and partner at one of the firms behind the deal, the Vistria Group, will be the new chairman of Apollo's board of directors. The other two buyers are Najafi Companies and Apollo Global Management, which is not affiliated with Apollo Education.
Apollo announced it was exploring a sale last month. The company has reported declining earnings and lagging enrollment in recent years. In June, the University of Phoenix announced that it would scrap most of its associates degree programs and close about 115 of its physical campuses. Student headcount has dropped from about 460,000 in 2010 to an anticipated 150,000 in 2016. It has also been the target of multiple investigations by the Department of Education, the Federal Trade Commission and the Department of Justice. In October the Department of Defense barred the University of Phoenix from using the tuition assistance program available to veterans enrolling as students.“The Apollo Education Group Board of Directors reviewed strategic alternatives and believes this transaction is in the best interest of all shareholders and strongly supports our transformation efforts,” said Greg Cappelli, CEO of Apollo Education Group. “This new structure will allow Apollo Education Group the flexibility and runway it needs to complete the transformational plan at University of Phoenix, which will enable us to serve our students more effectively during a period of unprecedented volatility within our industry.”
Before the University of Phoenix began bleeding students and losing revenue it entered into a $155 million naming rights deal for the Arizona Cardinals' football stadium in Glendale, Ariz., which has another ten years to run. Last year, it bought a controlling interest in The Iron Yard, a Greenville, S.C.-based coding boot camp designed to train students for web-based IT careers. Some observers believe boot camps, or coding academies, are the next big thing in for-profit higher ed.
“We are excited by the opportunity to build on the transformational work being done by the company,” said Miller. “For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices and poor compliance. This doesn’t need to be the case. We are committed to accelerating and enhancing efforts to establish University of Phoenix as the leading provider of quality higher education for working adults and to continue supporting the organization’s commitment to operating in a manner consistent with the highest ethical standards.”
In addition to being deputy secretary, Miller was the chief operating officer at the Department of Education during the Obama administration from 2009 to 2013. Miller oversaw day-to-day operations for programs and policy from early childhood through post-secondary education. A Department of Education spokesperson could not be reached for comment.