University of Arizona Global Campus: Critical Ethical and Legal Issues for Consideration

November 30, 2020

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University of Arizona Global Campus:

Critical Ethical and Legal Issues for Consideration[1]


The acquisition of for-profit, online Ashford University by the University of Arizona (UA) raises a range of ethical and legal issues. Even if legal issues are proven to be moot, UA has given insufficient indication that it intends to invest financial resources to improve Ashford’s poor academic and student services raising the question that the deal is motivated more by potential revenue and market share without regard for consequences for current and future students.

  • Ashford University has a very low level of student success.
    • Ashford University has a very low graduation rate—most students drop out or transfer—and leave with outstanding federal loans and no degree.
    • The five-year student loan default rate was 47% in 2014.
    • It has been subject to numerous lawsuits— future liability if past practices do no change would now also fall on UA.
    • Its poor performance led to a formal letter of concern from its accrediting agency Western Association of Schools and Colleges Senior College and University Commission (WSCUC) in 2019.
  • Ashford University relies primarily on adjunct faculty with a questionable level of academic rigor and integrity.
    • Only 4% of faculty are full-time and less than 10% of courses are taught by full-time faculty.
    • Only about 20 cents of each dollar in tuition presently goes to the faculty teaching courses.
    • The Accreditor has noted shortfalls in faculty pay, excessive workload and inadequate faculty governance in its letter of concern.
  • Ashford’s enrollment has declined significantly in the last decade and its financial status is questionable despite what appears to be a high tuition, low-cost education model.
    • Zovio, Ashford’s parent company, has a continued pattern of operating losses[2]
  • UA has been insufficiently clear in its priorities.
    • On one hand, the Ashford acquisition, with the plan to be branded as University of Arizona Global Campus (UAGC), has been discussed as a new revenue center, suggesting that the intention is not to improve Ashford but to pull about 5% of net revenues for UA priorities.
    • On the other hand, UA claims it will not tolerate Ashford’s previous poor performance once acquired—yet has not committed to the financial investment to turn it around.
    • About 70%-80% of revenues will be funneled back to its current owner Zovio[3], who has been responsible for the poor performance and will continue operating the institution post acquisition.
    • UA plans to continue UAGC’s current faculty model and the faculty will not be part of UA faculty.
    • UA will not include UAGC in its accreditation process with the Higher Learning Commission. Rather, it plans to keep it separately accredited with the WASC Senior College and University Commission
  • The acquisition raises critical questions regarding whether UA and by extension the Arizona Board of Regents are violating the credit and stock clauses of the Arizona Constitution with this transaction.

The 15-year Strategic Services Agreement between Zovio, UAGC, and the Board of Regents/UA has aa possible 7-year break point and designates Key Performance Indicators (KPI).  The public version does not provide adequate details on them.[4] GCI recommends the KPI include:

  • Benchmarks during the next 7 years for reducing the 5-year student loan default rate to no more than twice the current rate of UA and increase the portion of loans repaid for UAGC to at least half that of UA. Currently the default rate appears to be four times that of UA[5]
  • Benchmarks during the next 7 years for improving 8-year student completion rates so that they are at least 60% of UA’s and cutting the withdrawal rate to no more than 25%. Current completion rates are 40% of UA’s and nearly half of students withdraw.[6]
  • UAGC within the next three years expend a minimum of 30% of net tuition and fees on instruction, up from the current 19% as part of its plan to address these goals. By year 7 faculty investment should be at least 35% of net tuition and fees.

[1] On November 18, 2020 GCI provided a preliminary analysis for the Board of Regents done on an expedited timetable due to the timing of their meeting after Ashford’s accreditor, the Western Association for Schools and Colleges Senior College and University Commission, gave conditional approval to the acquisition. Where findings have been correct it will be footnoted in this version.  This version is more detailed and has additional information.

[2] The November 18th analysis incorrectly noted the stock price as 1 cent. That is the par value not the market value of the stock. Zovio stock sells at less than $4 per share. The stock surged to just above $6 when the University of Arizona acquisition was announced in August, but the price has since fallen back to around where it was before the announcement—suggesting that investors have less optimism about how the deal will improve Zovio’s profitability. Since Zovio’s profitability is largely based on net revenues for University of Arizona Global Campus, it suggests investors see less likelihood of enrollment growth.

[3] Note the analysis for the Regents cited 19.5% as the share of net revenues above what Zovio will receive.  From the purchase agreement Zovio also is paid for its service costs as well. Collectively it will likely represent about 70%-805 of UAGC net revenues.  More details later in the report.

[4] See Strategic Services Agreement, December 1, 2020,

[5] Analysis from Kevin Miller of The Century Foundation suggests currently Ashford’s five-year default rate is 26% more than four times UA’s 6%..

[6] Analysis from Kevin Mller of The Century Foundation suggests Ashford’s current 8-year completion is 23% compared to 61% for UA—so it would need to rise to 36%. Ashford’s current withdrawal rate is 46%, so it would need to be cut in half.