UA Global Campus cuts ties with troubled management company – Arizona Daily Star

On Monday, Paul Pastorek, president and CEO of University of Arizona Global Campus, announced in an open letter that the college and its online program manager, Zovio, have agreed to terminate their contract, effective July 31, 2022.

The school purchased the assets of the online program manager or OPM, retaining the technology infrastructure and about 90% of employees who previously worked on behalf of Zovio, for $1 dollar and will now oversee all of its operations in-house.

“By terminating the OPM agreement, yet bringing key personnel and systems into UAGC, we ensure that all personnel at UAGC are aligned toward a single purpose — the success of our students — and toward our mission to serve working adults and advance their social and economic mobility by offering a fair-priced, high-quality university degree,” Pastorek said in the letter. “In addition, this termination will allow UAGC to focus all resources on our goal of improving retention and student outcomes.”

This is the latest development in UA Global Campus’ two-year-long saga, which has had critics crying foul since the outset.

In 2020, the University of Arizona purchased the assets of Ashford University, a for-profit online school with a reputation for deceiving students, and rebranded it as the nonprofit UA Global Campus. That deal also involved retaining Ashford’s former parent company, Zovio (formerly known as Bridgepoint Education, Inc.), to provide services to help run the school.

Those services include IT, financial student aid, marketing, enrollment and some aspects of student advising. The 15-year contract with Zovio said the company would receive 19.5% of tuition revenue in exchange for its services.

But in the 20 months since UA Global Campus inked its contract with Zovio, the company’s reputation has remained at the center of public criticism — from UA faculty, lawmakers and higher education advocates — of the UA Global Campus deal.

That criticism intensified in January of this year, when the UA announced its plans to absorb UA Global Campus within the next year. While the two are still separately accredited institutions governed by a separate boards right now, the UA and the UA Foundation have already signed an agreement with the U.S. Department of Education that makes them “jointly and severally liable” for UA Global Campus’ performance, and would put the UA on the hook if UA Global Campus shut down.

Then, in March, a California judge ruled that Zovio must pay $22.4 million in penalties for misleading students about the cost and quality of an Ashford education. Although the judge noted he did not find evidence of wrongdoing after 2017, when the California Attorney General’s Office filed the suit against Zovio, critics still worried Zovio was running UA Global Campus in the same manner it had Ashford.

“Why are we working with this organization?” Lucy Ziurys, a UA faculty senator and professor of chemistry, said at a UA Faculty Senate meeting in February. “Students’ lives were ruined because of Zovio and Ashford.”

Zovio: Not enough capital

In addition to its legal troubles, Zovio has operated at a financial loss during the entirety of its relationship with UA Global Campus.

The company reported a 33% drop in annual earnings in 2021 compared to 2020.

As UA Global Campus’ enrollment has continued to decline — the latest enrollment estimate is around 26,000 students compared to 35,000 in December 2020 — Zovio hasn’t seen much improvement this year.

In its second-quarter earnings for 2022, which Zovio reported Monday, revenues were down 26% compared to the same quarter in 2021.

In May, the company sold its enterprise TutorMe for $55 million, shortly after alluding to its exploration of “potential divestitures” on an earnings call.

On a call with investors Monday morning, Zovio CEO Randy Hendricks said declining enrollment at UA Global Campus was a big driver of the company’s decision to terminate its contract with the school.

“We have looked at the capital and time related to get to a profitable contract arrangement with our clients, the University of Arizona Global Campus,” Hendricks told investors. “There just isn’t enough capital to do that.”

UAGC in ‘direct control’

Whether or not this decision is a positive one for the future of UA Global Campus, and the University of Arizona by association, depends on who you ask.

For Pastorek, who has led UA Global Campus since 2020, cutting ties with Zovio is the start of a new chapter for the online school.

“We had control, but it was through oversight. We didn’t have the employees reporting directly to us,” Pastorek told the Arizona Daily Star.

While there were systems in place to check behind Zovio’s actions, “Frankly, it’s much better to have direct control.”

Pastorek said the school considered hiring another online program manager once it learned Zovio planned on bailing out of its contract, but decided to go it alone by taking over the assets originally built up by Zovio.

“Everybody wants to be able to deliver the best they can for students,” Pastorek said. “In our case, we want students to be able to succeed and we can manage it more directly, more closely and more carefully without a split vision. When you have an OPM involved in it, they have their own objectives.”

UA President Robert Robbins, who personally signed off on the acquisition of Ashford in 2020 and the indemnification of the UA this year, agreed with Pastorek’s optimistic outlook for UA Global Campus now that Zovio’s out of the picture, calling the move “another positive step in the UAGC journey” in a campuswide memo Monday.

Bob Shireman, a senior fellow at the Century Foundation who has previously criticized the UA’s involvement with UA Global Campus and Zovio, called Monday’s announcement “a big, positive step,” that will bring “greater accountability and clearer lines of responsibility, reducing the likelihood of predatory recruiting practices and low quality that have plagued for-profit higher education.”

He cautioned, however, that the removal of Zovio from the equation also means, “If components of the school are not working, there will be no investors pushing to keep it going just to extract profits.”

And once the UA integrates UA Global Campus into its fold, “those important decisions will be in the hands of the University of Arizona leaders and the state Board of Regents.”

Faculty blindsided

But some faculty members are concerned they won’t have much say in any of those important future decisions about university policy — which is required by Arizona law — as it pertains to UA Global Campus. That’s because they say they haven’t been kept in the loop on much over the past two years.

Robbins assured the Faculty Senate in February, soon after the unexpected announcement that the UA intended to absorb UA Global Campus, that he would “engage and ask you to work with us on these issues” in an effort to “build back trust.”

Nonetheless, faculty leaders, who in May called for a risk assessment of unwinding the whole UA Global Campus deal, say they woke up to Robbins’ memo Monday morning blindsided, again.

“We are skeptical. We are unhappy. We do not like these surprises,” said Leila Hudson, chair of the UA faculty. “If there is a possible upside to it, we need to see the agreement and see what the strategy is.”