State Board greenlights University of Idaho’s $550 million University of Phoenix purchase

Photo Courtesy University of Idaho

This story was originally posted on on May 12, 2023.

The State Board of Education has endorsed the University of Idaho’s $550 million plan to purchase the University of Phoenix, a for-profit, online behemoth serving some 85,000 students.

Voting unanimously, the State Board endorsed a resolution allowing the U of I to set up a nonprofit to take over the University of Phoenix’s operations, dubbed NewU Inc. The resolution also gives the go-ahead on a financing plan for the purchase, which the U of I hopes to complete by early 2024.

Thursday’s State Board vote represents an early milestone in a dizzying, complicated and costly process — one that came to light barely 24 hours earlier.

NewU would finance the purchase through $685 million in bonds — a figure roughly equivalent to next year’s budget for Idaho’s entire higher education system. The University of Phoenix, meanwhile, has pledged to transfer $200 million to NewU, giving the nonprofit an infusion of cash, and effectively knocking down the $550 million purchase price.

Taxpayers would not be on the hook to bankroll the bonds. Still, the purchase carries some risk, and potential reward, for the U of I.

The university says it will guarantee up to $10 million a year to backstop the purchase, if NewU is unable to make its annual payments. But the U of I also says the deal could bring in $10 million in initial “supplemental education funding” for the university, an amount that the university expects to see grow over time. By the 2029-30 budget year, the total payments to the U of I could total $170 million, university CFO Brian Foisy told the State Board.