Grand Canyon University, to combat advertising investigation, appeals to staff

The U.S. Department of Education won't say whether it intends to fine Grand Canyon University over its marketing of doctoral degrees, even after school officials aired grievances with the federal agency's investigation and said they expected to be penalized.

"The U.S. Department of Education does not comment on institutional oversight activities, program reviews or investigations until any outcomes officially have been communicated to the institution," a spokesperson for the Department of Education said in a statement to The Republic.

In press statements and an employee meeting earlier this month, GCU President Brian Mueller said three federal agencies, including the Department of Education, are coordinating to "unjustly target" his school.

He suggested that the agencies' actions are related to the school's religious affiliation and a yearslong dispute between GCU and the Department of Education over the school's efforts to regain its nonprofit status. GCU is one of the largest private Christian universities in the country.

"The people in Washington, D.C., are not going to impugn the work we do," Mueller told faculty and staff last week, encouraging them to contact federal lawmakers in support of the university.

Department of Education officials say they are simply doing their jobs as federal regulators and "holding schools accountable for serving students' best interests."

"This is an example of the department taking reasonable and prudent oversight actions as a regulator to protect students and taxpayers and has nothing to do with the school's religious affiliation as a Christian university or history of litigation against the department," officials said in a statement.

The agency says its investigation determined that less than 2% of students who graduated from GCU's doctoral programs requiring dissertations paid the amount the university advertised as the total cost. It alleges "substantial misrepresentation" regarding the cost of completing a doctoral degree at GCU — a claim that the school firmly denies.

"Most students paid thousands more than the advertised cost," a statement from the Department of Education read.

A separate inquiry from the Federal Trade Commission is also pending related to phone calls made to prospective students by Grand Canyon Education, Mueller said. Grand Canyon Education used to own GCU but now is a separate for-profit educational services venture.

The Department of Education, the FTC and the U.S. Department of Veterans Affairs warned about 70 institutions in October 2021 that they would work together to crack down on any false promises about graduates' job and earnings prospects after complaints about predatory behavior from for-profit institutions surged. The list included GCU, even though it is recognized as a nonprofit by the Internal Revenue Service, the university's accreditors and some other regulators.

The FTC and the VA did not return The Arizona Republic's requests for comment.

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Contentious legal battle over GCU's nonprofit status

GCU has long fought with the Department of Education over its nonprofit status.

Two decades ago, GCU was a struggling university on the verge of bankruptcy. To pay off its debts, it became a for-profit school under the banner of Grand Canyon Education.

In 2018, the university split off from Grand Canyon Education, converting itself from a for-profit school to a nonprofit.

While the two entities are now separated, Grand Canyon Education still provides services like marketing, accounting and human resources to GCU. Mueller continues to serve as chairman of the for-profit company's board, although the entities otherwise have different governance.

While most regulators treat the school as a nonprofit, the Department of Education has repeatedly refused to do so over concerns about whether the university sufficiently separated from its former for-profit owner. Instead, it labeled the school as a for-profit institution in 2019, eventually sparking litigation from the university.

A federal judge last year upheld the Department of Education's status determination. The judge determined that its decisions met standards for "fair agency adjudication" and that the agency has the authority to decide whether a school is nonprofit or for-profit under Title IV, a section of the Higher Education Act of 1965 that delineates federal assistance for students pursuing postsecondary education.

GCU appealed, and the legal battle continues to rage. The case is scheduled for oral argument in December.

In the meantime, the status determination means that GCU must continue to follow regulations that only apply to for-profit universities when it comes to accessing federal student aid programs. The school also cannot be designated as a Hispanic Serving Institution and received less money from the pandemic-era CARES Act than its nonprofit peers.

GCU officials maintain that the school should be categorized as a nonprofit and that its revenue split with GCE is "within industry norms." Mueller said he's tired of his students being treated as "second-class citizens" and that the designation is "absolutely discriminatory and unfair."

GCU employees react after meeting about investigations

GCU employees seemed largely unfazed by the ongoing disputes between GCU and its federal regulators at a staff meeting in early October about the government inquiries.

Jason Thorne, a counselor at the university, told The Republic that he thought Mueller and other GCU higher-ups were "being transparent."

"He didn't let it sit and rumors come out about it," Thorne said.

Megan Sinden, who manages student Bible studies at the school, said communications about the issue have been "really clear and transparent."

Meanwhile, Department of Education officials say GCU's public pleas to employees, media and federal lawmakers won't stop them.

"We take our oversight obligations seriously, follow the facts where they lead and will not be dissuaded from enforcing the law and protecting students, taxpayers and the federal student aid programs," the statement read. "We are unapologetically challenging schools that mislead their students, whether for profit or not."

Sasha Hupka covers higher education for The Arizona Republic. Do you have a tip on Arizona's universities, community colleges or trade schools? Reach her at sasha.hupka@arizonarepublic.com. Follow her on X, formerly Twitter: @SashaHupka. Follow her on Instagram or Threads: @sashahupkasnaps.

This article originally appeared on Arizona Republic: Grand Canyon University appeals to staff to combat advertising inquiry