Grand Canyon University (GCU) is currently facing multiple challenges that have put the institution under scrutiny. The troubles began with a significant $37.4 million fine imposed by the Department of Education (ED). Now, the school is also dealing with a lawsuit from the Federal Trade Commission (FTC) alleging deceptive advertising and illegal telemarketing practices. On top of that, GCU is facing a risk-based audit initiated by the Department of Veterans Affairs (VA).
The root cause of these actions against GCU can be traced back to the Department of Education's findings that the university misled more than 7,500 students regarding the cost of its doctoral programs. GCU allegedly misrepresented the price of these programs, which is a crucial factor for students making decisions about their education. This is especially true for graduate programs, where funding is often limited, and loans can be substantial. Having accurate information about program costs is vital.
Samuel Levine, director of the FTC’s Bureau of Consumer Protection, stated, 'Grand Canyon deceived students by holding itself out as a non-profit institution and misrepresenting the costs and number of courses required to earn doctoral degrees.' GCU's advertising of doctoral program prices was found to be misleading by the Department of Education as well. Only 2% of graduates ended up paying the advertised prices, while 78% of graduates paid $10,000 to $12,000 more in total tuition than initially stated. GCU failed to disclose the additional costs of 'continuation courses' required to complete dissertations.
The FTC lawsuit has been filed against GCU, Grand Canyon Education (GCE), and Brian Mueller, the president of GCU and CEO of GCE. GCE is a for-profit company that GCU spun out of when attempting to convert from for-profit to non-profit status. The FTC noted that Mueller, being both GCU's president and CEO of GCE, benefits financially from the for-profit status. This connection raises concerns regarding GCU's true status as a non-profit institution.
In 2021, the Government Accountability Office (GAO) expressed concerns about colleges, including GCU, attempting conversion to non-profit status while retaining significant financial ties to their former for-profit owners. This may explain why the Department of Education has not recognized GCU's conversion, despite approval from the IRS and GCU's accreditor, the Higher Learning Commission (HLC). The refusal to recognize the conversion was made during Betsy DeVos's tenure as Education Secretary. The ED believed that GCU's conversion was primarily done to benefit GCE's shareholders, with GCU serving as its captive client.
In addition to the FTC lawsuit and ED fine, GCU is now facing a risk-based audit from the VA. The VA uses this method to determine if institutions that enroll veterans using GI Bill funds need more extensive scrutiny. Triggering events such as fines and lawsuits from other state or federal agencies can lead to heightened scrutiny. Failing a VA audit can result in veteran students being unable to use their GI Bill benefits at the institution.
GCU has publicly stated its intention to appeal the ED fine, contest the FTC lawsuit vigorously, and challenge the VA audit. The university has also implied that it is being targeted by the federal government due to its status as a Christian university. GCU has even declared its willingness to take the case to the Supreme Court if needed.
As the situation unfolds, Grand Canyon University will have to navigate these challenges and address the allegations against them. The outcomes of the lawsuit, audit, and fine will undoubtedly have significant implications for the institution and its reputation moving forward.
