Defending the $685 million University of Phoenix purchase, University of Idaho President C. Scott Green said his leadership team has “full faith” in Phoenix’s processes.
On Wednesday, Green sent off a lengthy — and swift — response to three U.S. senators who are urging the U of I to walk away from the proposed Phoenix purchase.
In their letter Monday, Sens. Richard Durbin, D-Ill., Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn., asked Green to respond to a series of questions about the purchase, by Sept. 30.
As such, Green’s five-page letter doesn’t touch on too much new ground. Green took pains to point out that an affiliated nonprofit, Four Three Education Inc., would acquire and operate Phoenix. He maintained that, even under the most conservative estimates, Phoenix’s cash flow should easily cover Four Three’s bond payments. And he said Phoenix’s move to a nonprofit status would free up new money “for focus on student success” at Phoenix and U of I.
Green also downplayed a key point in the senators’ letter.
The lawmakers contend that the U of I could be on the hook for millions of dollars’ worth of federal student loan writeoffs. A recent Inside Higher Ed article suggests the University of Arizona could face up to $72 million in liabilities from loan writeoffs involving its online partner, Ashford University.
Phoenix has pegged U of I’s loan exposure at $1.5 million a year, although Green has said the U of I’s modeling suggests a possible risk of $5 million to $7 million a year, or more.
But in his letter, Green pointed out that Four Three would receive $200 million in cash from Phoenix, and said Phoenix is “well-prepared” for any possible liabilities.
“Student loan debt is certainly something we pay attention to at U of I … and was considered part of our due diligence,” Green wrote. “As a result of our careful due diligence, U of I leadership has full faith in University of Phoenix’s processes.”