Apollo Education, the long-struggling company that owns the University of Phoenix, announced Monday that it is being bought by a group of investors with deep ties to the Obama administration. They plan to take the company private in a deal worth $1.1 billion.
Among the primary investors is a private equity firm led by one of President Obama's closest friends, Marty Nesbitt. The firm, the Vistria Group, will install the former deputy secretary of the Education Department, Tony Miller, as the company's new chairman. Several other private equity firms were also part of the deal.
The University of Phoenix has seen years of sliding enrollment in large part because of the work of the Obama administration, which has fought to impose tough new regulations on the for-profit college sector. The administration's "gainful employment" rule, passed last year, forced Phoenix to slash some of its lowest-performing programs, hoping to avoid penalties that would have cut off the programs' access to federal financial aid.
Phoenix's student body, now at about 200,000, is less than half of what it was at the company's peak, when students enrolled en masse in the wake of the recession.
The company launched a "transformation plan" last year to "repair the reputation of the University of Phoenix," saying it would implement once-unheard of measures like imposing admissions requirements and cutting back the frequency with which students could enroll. The plan, the company's CEO said, was to improve graduation rates and reduce the number of students who defaulted on their loans. But those measures were likely to further cut enrollment in the short-term, which made many investors unhappy.
In a statement Monday, Greg Capelli, Apollo Education's CEO, said that the deal to take the company private would give the company "the flexibility and runway it needs to complete the transformational plan at University of Phoenix."
Tony Miller, the former Obama administration official who will become Apollo's chairman, said in a statement that the company's buyers were committed to "establishing the University of Phoenix as the leading provider of quality higher education for working adults."
"For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance," Miller said. "This doesn't need to be the case."