Beware the Instant Global-Campus Movement

The University of Arizona took a big step into the online-education market this summer when it announced plans to buy Ashford University, a for-profit institution with more than 30,000 students, to create a new Global Campus. Recast as a nonprofit, the online university will still operate as a separate entity, but now it will carry the University of Arizona name. Arizona is following in the high-profile footsteps of Purdue University, which in 2017 announced plans to purchase the similarly large for-profit Kaplan University.

Both Arizona and Purdue, with one move, have outwardly leapfrogged their competition and became major players in the online world with a much more diverse set of learners — working adults from underserved demographic groups. So it’s not hard to see why other universities are looking to follow their leads. When Purdue University Global was being approved by accreditors in 2018, there were already a dozen other nonprofit colleges exploring potential acquisitions of existing for-profit online universities. This appears to be an emerging, problematic trend. Call it the Instant Global Campus movement.

Under the Purdue and Arizona arrangements, the parent for-profit companies, Kaplan Higher Education and Zovio, transition immediately from the perilous for-profit sector, with its shrinking enrollments and reputational baggage, into the lucrative and growing online-program-management market. The companies not only gain Purdue and Arizona as clients, each worth hundreds of millions of dollars per year in revenue, but also get a springboard to serve many other colleges with these services.

As for the universities, they get a ready-made online campus. Leaders of the institutions argue that it would take years to build up similarly robust online operations and that the acquisitions are a sensible shortcut. But that “buy versus build” argument is flawed. These new entities don’t help the parent university better serve students, including working adults, who will now provide significant revenue for the parent university. The global campus acquisitions don’t, for example, increase the number of starting dates per year or clear pathways to degrees at the parent institution. They are separate organizations, with separate accreditation, separate policies and practices, and separate student bodies. Separate in every way except the shared logo. They have little opportunity to improve the parent university or system, and in reality are distractions from any effort to make real changes.

Those changes should include creating more flexible academic models and figuring out how to improve the quality of online- and hybrid-course delivery and student services. Colleges are facing an existential crisis accelerated by the pandemic and financial crisis, and there is little reason to believe that things will return to the status quo. Traditional institutions need to adapt, and fast, to a world where online, and especially hybrid, education will play a bigger role. Time spent on these deals is time that isn’t being spent on preparing for these imminent challenges.

In addition, the promise of riches from global campuses is based on flawed assumptions about the power of a university brand and its ability to immediately turn around the fortunes of a declining online university. As a point of reference, Purdue University Global lost $43 million in its first full year, largely based on the $132 million in marketing it spent that same year to establish the new brand and attempt to reverse enrollment trends. There is little reason to believe that the University of Arizona won’t have to make a similar investment in its Global Campus.

Either way, it is doubtful that these global-campus deals will pay off in the way they are being touted in press releases. Arizona has said that they expect to bring in $25 million annually from the deal, but Ashford hasn’t been that profitable since 2013, when there was significantly less competition in the online space.

The biggest problem with these deals, however, isn’t that they are likely to fail. It’s that there’s a chance they’ll succeed. What happens if Purdue University Global grows enrollment and makes enough operating income to fund the 12.5-percent revenue-sharing payments to Kaplan Higher Education and pay the guaranteed tens of millions of dollars to Purdue? What happens if the University of Arizona Global Campus generates $25 million per year in profit for the University of Arizona and 19.5 percent for Zovio — above and beyond the costs of operations?

In those cases, we would see prestigious nonprofit universities charging much more in tuition than they spend on operations. The Instant Global Campus would be a cash cow, transferring tuition dollars out of the online schools and into the bank accounts of nonprofit research universities.

It’s clear to see which students win and which ones lose in this arrangement. In the case of the University of Arizona, its main student body is 4-percent Black and 22-percent first generation, whereas its proposed Global Campus is 32-percent Black and 48-percent first generation. The numbers for Purdue and its global campus are similar. Is transferring hard-earned tuition dollars from underserved online students to subsidize richer, younger, whiter university students’ education really the mission of a land-grant university, especially in this day and age?

In the end, the main thing colleges will gain with a successful global campus is bragging rights. Thanks to clever negotiating, they will now be mentioned in the same breath as Arizona State University and Southern New Hampshire University, institutions that spent a decade or more building up their online capabilities. They can take boastful pride in adding tens of thousands of new students. It makes little difference that these students are being exploited to support the far-more-traditional and privileged student population of the parent university.

Higher education can do better than this, but it will take honest self-evaluation. It will take the willingness to abandon vanity and big numbers and instead focus on difficult investments and long-term planning. It will take a commitment to hard work and a refusal to search for quick, clever answers.

In a bit of irony, it would be useful to learn the right lessons from the University of Maryland Global Campus (formerly the University of Maryland University College, and despite the name not of the same model of the Instant Global Campus), Arizona State University, and Southern New Hampshire University — the same institutions with large online populations that are used as an argument for the Instant Global Campus movement. In all three cases, these institutions avoided looking for the quick wins and artificial buy-versus-build framing. They all invested heavily in their online and hybrid capabilities, and they all committed to long-term organizational development and growth.

I am sympathetic to the notion that innovation often requires a separation from the parent organization, and that educational models targeted at nontraditional learners (and working adults in particular) are difficult to implement within a larger university. After all, ASU created EdPlus, and the University of Florida created UF Online. In those cases, however, the online units are structured in a way that they can help the parent university, unlike the completely separate global-campus models.

Perhaps other colleges will vary the Instant Global Campus model to address some of these problems. Perhaps when they acquire online institutions with significant underserved and adult populations, they will focus on better serving those students instead of viewing them mostly as a source of income to be extracted.

So far, however, the Instant Global Campus model we have seen is a distraction driven by the wrong motivations. Higher education needs better.