Grand Canyon University: Navigating Controversies and Legal Battles
Grand Canyon University (GCU), a prominent private Christian university in Phoenix, Arizona, has faced a series of controversies and legal challenges in recent years. These issues primarily revolve around allegations of misleading students regarding the costs of doctoral programs, disputes over the university's non-profit status, and related legal battles with the Department of Education (ED) and the Federal Trade Commission (FTC).
Scrutiny Over Doctoral Program Costs
A central controversy surrounding GCU involves accusations of misrepresenting the costs associated with its doctoral programs. The Education Department (ED) announced a significant fine in October 2023, alleging that the university misled thousands of current and former students about the actual expenses of their doctoral degrees. The lawsuit claimed that GCU informed applicants they would only need to pay for the equivalent of 20 courses to complete their accelerated doctoral programs, despite the fact that almost all students were required to take more courses.
The ED asserted that GCU advertised its doctoral programs as costing between $40,000 and $49,000. However, according to the agency's findings, less than 2% of graduates completed their programs within the advertised cost. The ED alleged that due to "continuation courses" necessary for degree completion, at least 98% of doctoral students at GCU ended up paying significantly more than the initially advertised amount. Specifically, over three-quarters of these students paid an additional $10,000 to $12,000 in tuition costs, representing roughly a 25% increase, depending on the program.
The ED argued that while GCU provided disclosures about the cost of its doctoral programs in fine print, these disclosures failed to adequately address or correct the significant misrepresentations regarding the actual cost. The agency contended that the disclosures did not dispel the "net impression" that the program would be less expensive than it actually was. The investigation encompassed approximately 7,500 students enrolled at GCU between 2017 and 2022.
University's Response and Legal Pushback
GCU has consistently denied any wrongdoing and has actively challenged the government's characterization of its doctoral programs. The university maintains that students receive comprehensive information about the time, cost, and credits needed to complete a doctoral degree throughout their enrollment and onboarding process. GCU asserts that its disclosures surrounding continuation courses, which are common in higher education doctoral programs, provide more information than is legally required or that other universities typically provide.
Read also: Internship Programs at Hilton Grand Vacations
Weeks before the ED announced its fine, GCU released a statement alleging that the government was "coordinating efforts to unjustly target GCU." The university suggested that the investigation into its tuition practices was in retaliation for a 2021 lawsuit filed against the ED regarding its classification as a for-profit university.
Dismissal of the Education Department's Fine
In a significant turn of events, the Education Department rescinded the $37.7 million fine against Grand Canyon University. In a Joint Stipulation of Dismissal order issued by the ED's Office of Hearings and Appeals, the Department dismissed the case "with no findings, fines, liabilities or penalties of any kind." The ED confirmed that it had not established that GCU violated any Title IV requirements, including the claim that GCU "substantially misrepresented" the cost of its doctoral programs.
GCU President Brian Mueller expressed his satisfaction with the dismissal, stating that the "facts clearly support our contention that we were wrongly accused of misleading our Doctoral students and we appreciate the recognition that those accusations were without merit."
Dispute Over Non-Profit Status
Another major point of contention for GCU has been its classification as a for-profit versus a non-profit institution. In 2019, the Education Department denied Grand Canyon University’s request to be considered a nonprofit for federal financial aid purposes. However, in November 2024, a three-judge panel of the Ninth Circuit Court of Appeals ruled unanimously that the ED acted unlawfully and exceeded its authority by applying an incorrect legal standard when it refused to acknowledge GCU’s lawful nonprofit status. The Ninth Circuit vacated the ED’s erroneous determination and remanded the case back to the agency to apply the correct standard. GCU is hopeful that process will be completed soon, as the IRS has already determined that GCU meets all legal requirements as a 501(c)(3) tax-exempt entity.
While the IRS considers GCU to be a nonprofit for tax purposes, the Education Department still classifies it as a for-profit school in relation to financial aid. GCU President Brian Mueller has emphasized that the IRS "clearly has the authority to grant us nonprofit status" and that the ED has historically honored the IRS's determination.
Read also: The history of Colorado Mesa
Legal Action by the Federal Trade Commission
In addition to the issues with the Department of Education, Grand Canyon University has also faced legal action from the Federal Trade Commission (FTC). The FTC filed a lawsuit against GCU, alleging deceptive marketing practices. However, the District Court of Arizona dismissed the FTC’s lawsuit against Grand Canyon University, concluding the FTC does not have jurisdiction under the FTC Act because GCU is not a corporation “operating for its own profit or that of its members.” The District Court ruling emphasized that “the mere fact that a nonprofit is earning revenue and expanding does not transform it into a for-profit." The FTC lawsuit continues against Grand Canyon Education, which provides services to GCU, and Mueller despite the fact the lawsuit essentially raises the same manufactured nonprofit and doctoral disclosure claims that have been refuted, rejected and dismissed.
Other Legal Disputes
Beyond the disputes with the ED and FTC, GCU has been involved in other legal matters. For example, a lawsuit filed in the District Court for the Northern District of Georgia, Young v. District Court of Arizona in FTC v., involved allegations of breach of contract. Young further argued that the university breached its contract by not providing the faculty support he was promised to complete his dissertation.
GCE faces another major lawsuit alleging the company has engaged in a racketeering scheme by misleading students about the cost of the university’s doctoral programs. Earlier this month, a federal judge rejected GCE’s motion to dismiss the case.
Grand Canyon Education's Role
Grand Canyon Education (GCE) plays a significant role in the operations of Grand Canyon University. Until 2018, Grand Canyon University was a part of GCE. When it split off from the company, the university entered a 15-year contract for educational services in exchange for about 60% of its tuition and fee revenue. GCE faces legal challenges related to the controversies surrounding GCU, including the FTC lawsuit and allegations of racketeering.
Ongoing Challenges and Future Outlook
Despite the dismissal of the ED's fine and the court ruling regarding its non-profit status, Grand Canyon University continues to face scrutiny and legal challenges. The FTC lawsuit against Grand Canyon Education remains ongoing, and the ED could potentially appeal the appeals court ruling on GCU's profit status.
Read also: Financial Aid at GCU
GCU has stated its intention to continue fighting the Education Department's fine and is encouraging staff and affiliates to contact federal lawmakers in the university's defense. The university is also hopeful that the ED will ultimately acknowledge its non-profit status, aligning with the IRS's determination.
tags: #grand #canyon #university #controversies
