(UPDATED, 7:39 p.m., with response from Sen. Jim Risch, R-Idaho.)
Condemning the University of Phoenix’s “pattern of predatory and abusive behavior,” three Democratic U.S. senators have urged the University of Idaho to walk away from a potential purchase.
In the letter Monday, Sens. Richard Blumenthal, D-Conn, Richard Durbin, D-Ill., and Elizabeth Warren, D-Mass., say the purchase threatens the U of I’s financial health. That’s because the U of I could end up on the hook for the cost of student loan writeoffs — as has happened with the University of Arizona, which acquired the online, for-profit Ashford University in 2020.
“UI similarly could face Phoenix’s potential liability for discharged federal loans, including thousands of pending borrower defense claims,” said the senators, who also said the U of I could face financial risk stemming from Phoenix’s $191 million settlement with the Federal Trade Commission.
Since announcing the $685 million purchase plan in May, U of I officials have downplayed the financial risk. They say the U of I’s affiliated nonprofit will be able to finance the purchase through Phoenix’s revenues, pointing out that Phoenix will transfer $200 million to the nonprofit at the time of purchase.
“Is the $200 million a contingent payment to cover anticipated liabilities?” the senators wrote.
The U of I and Phoenix did not immediately respond Tuesday to requests for comment.
The interest from Capitol Hill is not necessarily surprising. For-profit colleges — and Phoenix in particular — have been on the three senators’ radar for some time.
On May 3, two weeks before the U of I went public with its plans to acquire Phoenix, they co-signed a letter with three other colleagues, accusing Phoenix of running misleading advertisements. That letter went to Education Secretary Miguel Cardona, Defense Secretary Lloyd Austin and Veterans Affairs Director Denis McDonough.
Monday’s letter to Green took on a similar tone — accusing Phoenix of “preying on vulnerable students,” including veterans, low-income students and students of color.
And in the letter, the senators said the Phoenix acquisition also jeopardizes the U of I’s good name.
“We are concerned that UI’s acquisition will allow Phoenix to continue to abuse students under the guise of a trusted, public university.”
Risch: ‘Respect Idaho’s ability to make this determination’
Sen. Jim Risch, an Idaho Republican and U of I alumnus, said his colleagues should stay out of the matter.
“Any transaction like this should be closely examined to determine whether it is in the best interest of the state of Idaho, the university, and Idahoans,” Risch said in a statement Tuesday evening. “The university and the people of Idaho are more than capable of evaluating this matter. The senators from Massachusetts, Connecticut, and Illinois have no connection or interest in this. As a result, they should respect Idaho’s ability to make this determination in the best interest of our state.”